1 


Argued  by  Alex.  _ 

Of  Counsel  foT^Relator- 
Appellant-Respondent, 

129  Townsend  Avenue, 
Stapleton,  Staten  Island, 
New  York. 


3ln  ttjp  flinurt  of  Apppala 

STATE  OF  NEW  YORK. 


fy 


The  People  of  the  State  of  New  York 
. el  rel.  The  N.  Y.  C.  & II.  R.  R.  R.  Co., 
Relator- Appellant-Respondent, 

against 


The  State  Bo.a.rd  of  Tax  Commissioners, 
Defendants-Respondents, 


and 


The  City  of  New  York, 

I ntervenor-Respondent- Appellant. 


Assessments  of 
1900  and  1908 


BRIEFS  IN  BEHALF  OF  KELATOB- 
APPELLANT-UESPONDENT. 


Ira  a.  Place, 

Alex.  S.  Lyman, 

Attorneys  for  Relator- Appellant- 
Respondent. 


HEDRICK 


Ai'ijued  by  Alex  S.  Lyman 
of  Counsel  for  Relator- 
Appellant-Respondent. 


IN  THE 

(Eourt  of  Apprala 

State  of  New  York. 


The  People  of  the  State  of 
New  York  ex  rel  The  New 
York  Central  and  Hudson 
River  Railroad  Company, 

Relator-Appellant- 

Respondent, 


against 

George  E.  Priest,  J.  Edgar 
^ Leaycraft  and  Lester  F. 
Stearns,  together  constituting 
the  State  Board  of  Tax  Com- 
missioners, 

Defendants-Respondents, 

and 

^ The  City  of  New  York, 

Intervenor-Respondent- 

Appellant. 

(Assessment  of  1900.) 


1 


BRIEF  IN  BEHALF  OF  RELATOR- 
^ APPELLANT-RESPONDENT. 


_ Statement. 

* 

These  are  cross  appeals  by  the  relator,  and  l)y 
^he  City  of  New  York,  intervenor,  from  an  order 
c>  of  the  Appellate  Division,  Third  l)e{mrtment, 
entered  in  the  office  of  the  Clerk  of  Albany  County 


I I I 6490 


9 


on  the  26tli  day  of  March,  1912,  unanimously 
affirming  (fol.  2308a)  a final  order  (p.  745,  fol. 
2233),  entered  in  the  office  of  the  Clerk  of  Albany 
County  on  the  sixth  day  of  March,  1911,  on  direc- 
tion of  the  Hon.  Alden  Chester,  Justice,  modify- 
ing, and  as  modified,  affirming  the  assessment 
made  in  the  year  1900  by  the  defendants  consti- 
tuting the  State  Board  of  Tax  Commissioners, 
upon  the  property  of  the  relator  as  a special 
franchise  tax  assessment.  The  modification  con- 
sisted of  reducing  the  assessments  made  by  the 
defendant  State  Board  of  Tax  Commissioners  in 
the  Slim  of  $10,192,000.  to  the  sum  of  $6,828,640. 
in  order  to  equalize  it  with  assessments  of  other 
real  property,  not  special  franchises,  located  in 
the  same  tax  district,  namely.  Borough  of  Man- 
hattan, City  of  New  York. 

Statement  of  Facts. 

The  defendants,  the  State  Board  of  Tax  Com- 
missioners, have  assumed  to  assess  as  a special 
franchise  the  railroad  of  the  relator,  leased  from 
the  New  York  and  Harlem  Railroad  Company, 
extending  upon,  under  and  over  a strip  of  land 
known  as  Park  (formerly  Fourth)  Avenue,  in  the 
Borough  of  Manhattan,  City  of  New  York,  from 
the  southerly  line  of  45th  Street  to  a point  near 
133rd  Street,  at  which  point  the  railroad  turns 
easterly  from  Park  Avenue,  crosses  private  prop- 
erty owned  by  the  Railroad  Company  between  the 
easterly  line  of  Park  Avenue  and  the  southwest- 
erly bulkhead  line  of  the  Harlem  River,  thence  by 
bridge  over  the  Harlem  River,  and  thence  over 
the  private  right  of  way  of  the  Railroad  Com- 
pany. 

While  our  purpose  is  to  set  forth  with  neces- 
sary detail  under  the  Points  of  this  brief  the 


3 


somewhat  voluminous  facts  with  reference  to  the 
origin  and  history  of  this  railroad,  it  seems  perti- 
nent, by  way  of  i)reliininary,  to  sketch  brielly  the 
situation  of  this  case,  the  questions  which  are  pre- 
sented on  this  appeal,  and  the  situation  of  the 
law  bearing  on  the  questions  involved,  which  has 
developed  considerably  since  these  proceedings 
were  instituted. 

This  railroad  was  originally  chartered  by 
Chapter  263  of  the  Laws  of  1831  for  the  purpose 
of  connecting  what  was  then  the  upper  part 
of  the  old  City  of  New  York  with  the  then  village 
of  Harlem.  A system  of  paper  streets  shown  on 
the  city  map  filed  in  1811,  but  in  1831  unopened, 
covered  the  entire  northerly  portion  of  Man- 
hattan Island,  consisting  then  wholly  of  farming 
and  grazing  lands,  excepting  the  small  settlement 
comprising  the  Village  of  Harlem.  The  respect- 
ive termini  of  the  railroad  were  23rd  Street  and 
the  Harlem  River.  The  Railroad  Company  was 
authorized  to  locate  its  railroad  within  the  limits 
of  the  Eighth  Avenue  on  the  west  and  the  Third 
Avenue  on  the  east.  Obviously  the  location  of 
the  road  had  to  cross  110  ))appr  streets  run- 
ning east  and  west,  or  occupy  longitudinally  a 
paper  avenue  running  north  and  south.  In  either 
event  the  company  was  required  under  its  charter 
to  secure  the  consent  of  the  city  to  crossing  or  oc- 
cupying such  streets  whether  opened  or  not.  The 
Railroad  Company,  with  the  consent  of  the  City, 
accordingly  filed  its  niaj)  locating  its  railroad 
on  an  avenue  shown  on  said  city  ina)),  filed  in 
1811,  as  Fourth  Avenue.  The  latter  at  that  time 
was  opened  northerly  only  so  far  as  38th  Street ; 
above  that  point  the  land  indicated  includefl  within 
the  mapped  street  was  privately  owned.  The  Rail- 
road Company  entered  into  an  agreement  with  the 


4 


City,  of  date  January  9tli,  1832,  with  reference 
to  the  occupation  of  Fourth  Avenue,  and  acquired 
title  to  its  right  of  way  north  of  38th  Street  by 
grants  from  the  owners,  by  condemnation  pro- 
ceedings, and  by  permission  from  the  City  of 
New  York,  which  in  its  private  capacity  was  the 
owner,  under  the  Dongan  and  Montgomerie 
Charters,  of  a large  tract  of  land  known  as  the 
Common  Lands  lying  along  both  sides  of  Fourth 
Avenue,  between  48th  and  84tii  Streets.  The  Rail- 
road Company  entered  into  possession  of  its  en- 
tire right  of  way  for  purposes  of  construction  in 
or  prior  to  1833,  and  its  railroad  to  the  Harlem 
River  was  completed  in  or  about  the  year  1837, 
and  has  been  since  continuously  operated. 

In  1850  the  City  commenced,  and  in  1853  con- 
cluded, under  the  general  Act  of  1813,  a proceed- 
ing to  open  Fourth  Avenue  from  38th  Street  to 
135th  Street,  or  the  shore  line  of  the  Harlem 
River.  In  this  proceeding  the  title  of  the  Rail- 
road Company  was  recognized,  and  an  award  of 
one  dollar  made  for  each  segment  of  its  right  of 
way  between  the  center  lines  of  cross  streets,  the 
railroad  at  the  time  having  been  for  over  20  years 
in  actual  physical  occupation  of  this  strip  of  land. 

By  Chapter  702  of  the  Laws  of  1872  the  Legis- 
lature required  the  Railroad  Company,  and  the 
City  of  New  York,  to  improve  Fourth  Avenue,  by 
tlie  elimination  of  all  grade  crossings,  and  by  ab- 
solutely separating  the  railroad  use  and  the  street 
use  from  the  strip  of  land  known  as  Fourth  Ave- 
nue. The  City  contributed  heavily  to  the  expense 
of  this  improvement. 

By  Chapter  339  of  the  laiws  of  1892,  and 
amending  acts,  the  Legislature  required  a further 
improvement  in  Fourtb  Avenue  at  the  northerly 
end  thereof,  in  effect  closing  u])  the  deju’essed 
cut  which  bi-sected  the  avenue  from  115tb  Street 


o 


north,  and  in  which  the  railroad  tracks  ran,  and 
substituting  in  place  thereof  an  elevated  railroad 
viaduct  structure.  To  the  cost  of  this  improve- 
ment also,  the  City  was  required  to,  and  did,  con- 
tribute a substantial  amount. 

In  view  of  this  situation  it  has  always  been  con- 
sidered a matter  of  great  doubt  whether  the  rail- 
road constructed  and  maintained  under  these  cir- 
cumstances constituted  a special  franchise.  In 
1900,  and  the  succeeding  years,  the  local  Board  of 
Tax  Assessors,  as  they  had  theretofore  done,  as- 
sessed this  section  of  railroad  for  purposes  of 
taxation,  and  the  State  Board  of  Tax  Commission- 
ers, the  defendants  herein,  also  assumed  to  assess 
it  as  a special  franchise. 

The  claim  of  the  relator,  succinctly  stated,  is 
and  has  been,  that  the  assessment  last  mentioned 
was  illegal,  because  the  State  Board  was  without 
jurisdiction,  the  railroad  not  constituting  a spe- 
cial franchise,  that  it  was  excessive,  and  that  it 
was  unequal. 

Certiorari  proceedings  for  the  years  1901  to 
1908,  inclusive,  similar  to  the  proceedings  in  this 
case,  were  sued  out  by  the  relator,  and  after  the 
Return  was  filed,  the  cases  were  all  referred  to 
Mr.  James  G.  Graham,  as  Referee,  to  take  testi- 
mony, and  report  with  his  opinion  thereon,  and 
the  proceedings  were  all  tried  practically  together 
before  Mr.  Graham;  a separate  record,  however, 
being  made  in  each  case.  As  the  testimony  taken 
before  the  Referee  is  printed  without  change,  tin* 
Court  will  understand  that  very  much  of  the  evi- 
dence was  otTered  as  to  all  of  the  years. 

It  was  urged  before  the  Referee,  and  before  the 
Special  Term,  that  the  franchise  tax  law  did  not 
include  steam  surface  railroad  highway  occupa- 
tions. That  question,  having  been  passed  upon 
by  the  Court  of  >\ppeals  in  the  ease  of  People  ex 


6 


rel  The  New  York  Central  and  Hudson  River 
Railroad  Company  vs.  State  Board  of  Tax  Com- 
missioners, as  to  crossings  in  the  City  of  Buffalo, 
the  opinion  being  handed  down  October  17,  1911 
(203  N.  Y.,  167),  and  the  Act  held  applicable  to 
highways  in  existence  before  the  railroad,  is  not 
presented  on  this  appeal,  the  relator  deeming  that 
it  has  been  disposed  of. 

Upon  the  trial  before  the  Referee  and  the 
Court,  particular  stress  was  laid  by  relator  upon 
the  proposition  that  as  the  railroad  ante-dated 
the  street  it  could  not  be  designated  a special 
franchise.  The  Referee,  following  the  opinion  of 
Mr.  Justice  Chester  in  the  Buffalo  franchise  tax 
case,  held  that  it  made  no  difference  whether  the 
street  was  junior  to  the  railroad  or  not,  provided 
only  that  at  the  time  the  assessment  was  laid  it 
was  a public  street  (p.  725,  fols.  2175-6).  This 
view  the  C^ourt  of  Appeals  has  overruled  in  the 
Buffalo  franchise  tax  case  just  cited,  holding  that 
the  junior  highway  occupation  by  a steam  railroad 
does  not  constitute  a special  franchise. 

The  learned  Appellate  Division  sustains  the 
legality  of  the  assessment  on  an  entirely  different 
and  novel  ground,  namely,  that  the  relator,  or  its 
lessor  the  New  York  and  Harlem  Railroad  Com- 
pany, is  estopped  from  asserting  that  this  avenue 
was  not  an  open  public  street  at  the  time  the  rail- 
road was  l)uilt  because  its  charter  required  the 
City’s  assent  to  its  location  on  a then  ])aper 
street.  A new  species  of  taxable  property  is  ac- 
cordingly ranged  under  the  franchise  tax  law, 
namely,  what  may  he  termed  a special  franchise 
hy  anticipation.  No  authority  is  cited  to  sustain 
this  position,  (p.  770i,  fols.  2.308i  to  2309n.) 

A similar  situation  legally  was  ])rosented  to  the 
Second  De])artment  of  the  A])])ellate  Division  in 
Peo.  ex  ret  L.  7.  R.  R.  Co.  vs.  State  Board  of 


Tax  Commissioners  (133  N.  Y.  Supp.  348;  Ad- 
vance sheets  No.  593;  148  App,  Div.  p.  751),  where 
the  relator’s  predecessor  railroad  company  agreed 
under  legislative  authority  with  the  City  of  Brook- 
lyn to  locate  its  railroad  along  the  central  por- 
tion of  a projected  street  known  as  Atlantic 
Avenue.  Both  the  Special  Term  and  the  Appel- 
late Division  held,  the  latter  unanimously,  that 
the  location  of  such  railroad  along  the  central 
portion  of  Atlantic  Avenue,  which  was  opened 
under  proceedings  taken  by  the  City  immediately 
after  tlie  agreement  was  made,  did  not  constitute 
a special  franchise  under  the  tax  law,  but  that 
the  right  of  the  relator  to  occupy  Atlantic  Ave- 
nue is  solely  assessable  by  the  local  tax  authori- 
ties, the  proposition  which  the  relator  has  uiii- 
fonnly  asserted  in  the  case  at  bar,  its  position 
being  fortified  by  the  fact  that  Fourth  (or  Park) 
Avenue  was  not  opened  and  was  not  a public 
street  until  some  20  years  after  the  railroad  occu- 
pation. It  is  believed  that  the  appeal  of  the  Inter- 
vener, the  City  of  New  York,  in  the  Atlantic  Ave- 
nue case  will  be  argued  at  about  the  same  time 
with  the  appeal  in  the  case  at  bar.  Our  argument 
that  the  State  Board  was  without  jurisdiction  and 
that  its  assessment  is  illegal  is  discussed  under 
the  First  Point  of  this  l)rief. 

On  the  question  of  the  excessiveness  of  the  as- 
sessment the  learned  Referee  held  that  the  relator 
had  not  made  out  a satisfactory  case,  principally 
because  it  had  not  called  exy)ert  witnesses  to  tes- 
tify as  to  the  value  of  the  intangible  element  in 
the  alleged  special  franchise  (fols.  2210-2222). 
In  the  Buffalo  franchise  tax  cases  the  Referee 
there,  and  the  Court,  held  that  the  value  of  the 
intangible  element  was  not  susceptible  of  f)roof  l)y 
opinion  evidence,  l)ecause  invading  the  province 
of  the  Court,  and  the  Court  of  .\ppeals  in  th(> 


» 


8 

Buffalo  ease  last  cited  has  sustained  this  view, 
so  that  the  lieferee  is  left  in  the  position  of  crit- 
icising the  relator  for  its  omission  to  produce  evi- 
dence which  the  Court  of  Appeals  says  is  not  com- 
petent and  cannot  he  admitted. 

The  learned  Appellate  Division  affirms  this 
branch  of  the  case  on  the  ground  that  the  net 
earnings  rule  is  inapplicable  to  this  situation  and 
that  wholly  diverse  and  various  considerations 
may  enter  into  the  fixing  of  the  assessment  under 
the  circumstances  here  shown.  This  ruling  prac- 
tically deprives  the  relator  of  the  power  to  review 
the  question  of  excessiveness.  The  finding  of  the 
Tax  Commissioners  would  have  been  just  as  in- 
vulnerable if  they  had  with  no  more  arbitrariness 
than  that  actually  evidenced,  fixed  the  valuation 
of  the  intangible  element  at  $50,000,000.  or  $500,- 
000,000.  instead  of  at  about  $5,000,000. 

The  unanimous  affirmance  restricts  our  discus- 
sion under  this  head  to  such  questions  as  are 
raised  by  the  findings  {Peo.  ex  rel  Brooklyn 
Heights  R.  E.  Co.  vs.  State  Board  of  Tax  Com- 
inissioners,  ifOf  N.  Y.  Adv.  Sheets  Vol.  585  p.  92). 

Following  the  uniform  current  of  decisions  on 
the  subject  the  learned  Referee,  however,  did  find 
that  the  assessment  was  unequal  in  that  the  al- 
leged special  franchise  had  been  assessed  at  full 
value  while  other  real  estate  in  the  same  taxing 
district,  not  special  franchises,  had  been  assessed 
at  67%  only  of  the  value  in  the  year  1900,  and  he 
accordingly  reduced  the  assessment  to  equalize 
it  as  above  stated. 

The  Referee  was  sustained  in  his  findings  in  all 
respects  by  the  learned  Specijfl  Term,  Mr.  Jus- 
tice Chester  presiding  and  writing  no  o])inion. 
The  Appellate  Division  has  affirmed  this  branch 
of  the  case.  All  the  findings  found  by  the  Keferee 


9 


were  found  by  the  Court,  and  all  the  findings  re- 
fused by  the  Referee  were  refused  by  the  Court. 

The  City  of  Xew  York,  iutervenor,  appeals 
from  the  affirmance  of  the  final  order,  as  we  un- 
derstand it,  solely  on  the  ground  that  it  was  error 
to  equalize  the  assessment  because,  as  the  City 
of  New  York  claims,  the  alleged  special  franchise 
was  worth  a great  deal  more  than  the  figure  fixed 
by  the  Tax  Commissioners.  There  is,  however, 
» no  finding  made  bj’  the  Referee,  or  the  Court,  to 
that  effect.  The  Court  of  Appeals  has  passed  on 
this  question  in  its  decision  handed  down  in  People 
ex  rel  the  Hudson  & Manhattan  R.  R.  Co.  vs.  State 
Board  of  Tax  Commissioners  (203  N.  Y.  119,  132), 
and  has  specifically  held  that  in  the  absence  of 
any  finding  that  the  assessed  valuation  of  the 
relator’s  property  was  less  than  its  true  value, 
even  when  reduced  so  as  to  equalize  with  the  pre- 
vailing rate  of  assessment,  it  must  be  assumed 
that  the  State  Board  assessed  the  relator’s  prop- 
erty at  its  full  value.  This  would  seem  to  dispose 
of  the  City’s  appeal  in  this  case. 

As  the  same  legal  questions  and  substantially 
the  same  questions  of  fact,  were  involved  in  the 
years  1901  to  1907,  both  inclusive,  it  is  deemed 
sufficient  for  the  present  to  present  the  conten- 
tions of  the  parties  upon  the  record  for  the  year 
1900. 

In  the  year  1908  the  Tax  Commissioners  added 
to  the  Park  Avenue  assessment  amounts  rei)re- 
senting  new  items  of  property,  namely,  the  south- 
erly half  of  the  bridge  crossing  the  Harlem  River 
claimed  to  be  a special  franchise,  and  certain  sub- 
.surface  riglits  in  the  cross  streets  from  4;jth  to 
50th  Streets  east  and  west  of  Park  Avenue,  which 
the  (k)in[)any  secured  from  the  City  of  New  York 
under  the  statute  for  the  purpose  of  carrying  out 
its  extensive  imy)rovements  at  the  (Irand  Clentral 


10 


Terminal,  now  under  construction.  The  same 
questions  tiiat  are  presenied  in  the  1900  record 
are  also  presenied  in  tlie  1908  record,  besides  the 
two  other  questions  stated.  A further  dift'erence 
which  should  be  noted  is  that  for  the  year  1900 
the  method,  or  lack  of  method,  used  by  the  State 
Board  of  Tax  Commissioners  in  assessing  the  al- 
leged special  franchise  in  Park  Avenue  was  fully 
brought  out,  the  Commissioners  appearing  and 
testifying  as  witnesses  (fols.  388-429).  For  the 
year  1908  the  Court  vacated  the  subpoenas  which 
the  relator  had  served  upon  the  defendant  Tax 
Commissioners  (1908  record,  fol.  1477),  on  the 
ground  that  an  amended  return  would  contain  all 
the  information  that  relator  was  entitled  to  get 
as  to  the  methods  pursued  in  making  the  assess- 
ment. An  amended,  or  further.  Return  was  filed, 
and  the  same  is  printed  in  the  1908  record  (fol. 
151),  but  which  relator  contends,  and  the  Referee 
and  Court  below  agree,  contains  no  information 
whatever  for  the  Court,  leaving  the  methods  of 
the  Tax  Commissioners  in  making  this  assessment 
absolutely  in  the  dark. 

To  avoid  needless  repetition,  we  have  presented 
in  the  brief  for  the  1908  case,  only  the  discussion 
upon  questions  which  are  peculiar  to  that  ease, 
or  different  from  the  record  for  1900,  and  with  a 
view  to  promoting  the  convenience  of  the  Court, 
we  have  taken  the  liberty  of  binding  the  brief  in 
the  1908  case  together  with  the  present  brief. 

Further  facts  will  be  stated  under  the  respec- 
tive Points. 


11 


FIRST  POINT. 

The  State  Board  of  Tax  Commissioners 
was,  and  is,  without  jurisdiction,  because 
the  railroad  of  the  Relator  in  Park  Ave- 
nue had  been  built,  maintained  and  oper- 
ated long  prior  to  the  coming  into  exis- 
tence as  a public  street  of  the  strip  of  land 
on  which  it  was  so  ,_construoted,  main- 
tained and  operated,  and  the  avenue  when 
opened  was  opened  subject  to  the  prior 
rights  of  the  railroad. 

This  point  is  raised  in  the  petition  for  writ  of 
certiorari  (p.  23,  fol.  68) : 

"‘Second.  That  said  assessment  is  illegal 
in  that  said  State  Board  had  no  jurisdiction 
or  authority  under  said  act,  to  make  the  same 
for  the  reason  that  the  line  of  railroad  of  said 
The  New  York  and  Harlem  Railroad  Com- 
pany between  42nd  Street  and  the  Harlem 
River,  in  the  Borough  of  Manhattan,  City  of 
New  York,  is  not  constructed  and  operated 
under  or  by  virtue  of  any  franchise,  right 
or  peiTiiission  to  construct,  maintain  and 
operate  the  same  in,  under,  above,  on  or 
through  any  street,  highway  or  public  place.” 

and  then  follows  in  the  j)etition  a recital  of  the 
corporate  history  of  the  Coni[)any,  and  of  the 
street;  all  of  which  was  pi’oved  in  evi«lence  with- 
out disi)ute.  The  petition  on  this  branch  of  the 
case  concludes  with  the  following  (fol.  86) : 

‘‘That  the  entire  line  of  railroad  of  said 
The  New  York  and  Harlem  Railroad  (Com- 
pany as  the  same  is  now  constructed,  main- 


12 


tained  and  operated  from  42nd  Street  to  tlie 
Harlem  River,  in  the  City  of  New  York,  Bor- 
ough of  Manhattan,  was  constructed  and  is 
now  maintained  and  operated  under  and  pur- 
suant to  the  rights  acquired  under  and  by  the 
deeds,  grants,  agreements,  ordinances  and 
legislative  acts  hereinbefore  in  this  petition 
mentioned,  and  said  line  of  railroad  of  The 
New  York  and  Harlem  Railroad  Company 
between  42nd  Street  and  the  Harlem  River 
in  the  City  of  New  York,  Borough  of  Man- 
hattan, is  not  constructed,  maintained  and 
operated  under  any  franchise,  right  or  per- 
mission to  construct,  maintain  and  operate 
the  same  in,  under,  above,  on  or  through  any 
street,  highway  or  public  place.” 

The  New  York  and  Harlem  Railroad  Company, 
the  relator’s  lessor,  was  incorporated  l)y  Chapter 
263  of  the  Laws  of  1831  (fob  179),  and  to  that  act 
and  its  amendments  we  must  look  for  the  original 
grant  of  whatever  rights  or  powers  the  company 
secured,  or  subsequently  exercised.  The  incor- 
porators named  in  Section  1,  are  constituted  a 
liody  politic  and  corporate  under  the  name  of  the 
New  York  and  Harlem  Rail-Road  Company,  with 
power 

“to  construct  a single  or  double  rail-road  or 
way  from  any  point  on  the  north  l)ounds  of 
Twenty-third  street,  to  any  point  on  the  Har- 
lem river,  between  the  east  bounds  of  tlie 
Tliird  avenue  and  the  west  bounds  of  the 
Eighth  avenue  * * * to  trans])ort,  take  and 
carry  property  and  persons  upon  the  same, 
by  the  iiower  and  force  of  steam,  of  animals 
or  of  any  mechanical  or  other  power,  or  of 
any  combination  of  them  which  the  said  com- 
pany may  choose  to  em))loy;  and  by  that 
name,  they  and  their  snccessors  shall  l)e  and 


13 


they  are  hereby  vested  with  the  right  and 
privilege  of  constructing,  erecting,  building, 
making  and  using  a single  or  double  railroad 
or  way  for  the  purpose  aforesaid,  and  for  the 
term  of  thirty  years  from  the  passage  of  this 
act.” 

Section  2 provides  that  the  corporatioii  sliall 
forever  cease,  and  that  this  act  shall  be  null  and 
void  if  such  corporation — 

“shall  not  within  six  months  from  the  pass- 
age of  this  act  locate  the  route  of  said  rail- 
road or  way  * * * and  make  a survey  of 

such  location  and  file  a map  thereof  in  the 
Register’s  office  of  the  city  and  county  of 
New  York,  and  within  two  years  from  the 
passage  of  this  act  commence,  and  within  four 
years  from  the  passage  of  this  act  construct, 
finish  and  put  in  operation  the  said  single  or 
double  railroad  or  ways;  * * * no 

such  map  shall  be  filed  until  the  same  shall 
have  been  submitted  to  and  approved  by  the 
common  council  of  the  city  of  New  York; 
such  api)robation  shall  be  expressed  by  a 
joint  resolution  of  the  said  common  council, 
declaring  their  approbation  of  the  ma[j,  and 
of  the  route  of  the  said  railroad  indicated 
therein.” 

It  will  be  observed  that  this  ajjproval  by  the 
common  council  was  required  wherever  said  road 
within  the  bounds  indicated  might  he  located;  that 
is,  whether  upon  one  of  the  avenues  shown  on  the 
city  map  or  over  private  property  l)etween  the 
avenues,  and  crossing  numerous  streets  running 
east  and  west,  shown  on  the  city  map,  i)ut  un- 
ojiened  and  unused. 

Section  4 provides  that  aftei’  the  cai)ital  stoek 
shall  have  been  subscribed  the  directors  shall  be 
ele<'t<*d — 


14 


“and  tlie  said  Board  of  Directors  shall  have 
power  to  appoint  an  engineer,  and  cause  such 
examinations  and  surveys  for  the  said  rail- 
road to  be  made  as  may  be  necessary  to  the 
selection  by  them  of  the  most  advantageous 
line,  course  or  way  for  the  said  way ; and  the 
said  board  of  directors  shall,  after  such  ex- 
aminations and  surveys  shall  be  made,  select 
and  under  their  hands  and  seals,  designate 
tbe  line,  course  or  way,  which  they  may  deem 
most  advantageous  for  the  said  railroad,  one 
of  which  certificates  shall  be  filed  in  the  office 
of  the  register  of  the  city  and  county  of  New 
York;  which  line,  course  or  way,  so  selected 
and  certified,  shall  be  deemed  the  line,  course 
or  way  on  which  the  said  corporation  shall 
construct,  erect,  build  or  make  their  single 
or  double  railroad  or  ways  as  hereinafter 
mentioned;”  * 

Section  8 provides  among  other  things — 

“The  said  corporations  are  hereby  author- 
ized, by  their  agents,  surveyor,  and  engineers, 
to  enter  upon  such  route,  place  or  places,  to 
be  designated  as  aforesaid  by  the  said  direc- 
tors, as  the  line,  course,  road  and  way  where- 
on to  construct  their  single  or  double  railroad 
or  ways;  and  it  shall  be  lawful  for  the  said 
corporation  to  enter  upon  and  take  posses- 
sion of  and  use  all  such  lands  and  real  estate 
as  may  be  indispensable  for  the  construction 
and  maintenance  of  their  single  or  double 
railroad  or  ways,  and  may  also  receive,  hold 
and  take  all  such  voluntary  grants  and  dona- 
tions of  land  and  real  estate  as  shall  be  made 
to  the  said  corporation,  to  aid  in  the  construc- 
tion, maintenance  and  accommodation  of  the 
said  single  or  double  raili'oad  or  ways,  pro- 
vided that  all  lands  or  real  estate  thus  en- 
tered and  taken  possession  of  and  used  by 


15 


said  corporation,  and  which  are  not  dona- 
tions, shall  be  purchased  by  the  said  corpora- 
tion, of  the  owner  or  owners  of  the  same,  at 
a price  to  he  mutually  agreed  upon  between 
them;”  * * * 

Then  follows  in  case  of  disagreement  the  pro- 
cedure in  the  nature  of  condemnation  proceed- 
ings to  be  taken  before  the  Vice-Chancellor  of  the 
First  Circuit,  providing  with  reference  to  the 
order  of  confirmation — 

“and  when  said  order  or  decree  shall  be  re- 
corded in  the  office  of  the  register  of  the  city 
and  county  of  New  York,  the  said  corporation 
shall  be  seized  and  possessed  of  the  fee  simple 
of  all  such  land  or  real  estate,  and  may  enter 
upon,  take  and  use  the  same  for  the  purpose 
of  the  said  road.” 

Section  10  provides  as  follows: 

“The  said  corporation  is  herel)y  authorized 
to  construct,  erect,  build,  make  and  use  a 
single  or  double  railroad  or  ways,  of  suitable 
width  and  dimensions,  to  be  determined  by 
the  said  corporation,  on  the  line,  course  and 
way  selected  or  designated  by  them  in  man- 
ner aforesaid,  and  shall  have  jjower  to  regu- 
late the  time  and  manner  in  which  goods  and 
passengers  shall  be  transported,  taken  and 
carried  on  the  same,  and  shall  have  power  to 
erect  and  maintain  toll  houses  and  such 
other  buildings  for  tlie  accommodation  of 
their  concerns  as  they  may  deem  suitable  for 
their  interests;  the  said  corporation  shall  not 
take  any  laiuls  without  the  consent  of  the 
owner  or  owners  thereof,  (‘xceeding  forty  feet 
in  width  from  east  to  west,  and  shall  in  case 
of  their  locating  the  route  of  the  said  rail- 
road in  or  along  any  j)ublic  stre(>t  or  avenue 


16 


now  laid  out  on  the  map  or  plan  of  the  city 
of  New  York,  leave  sufficient  space  in  the  said 
street  or  avenue  on  each  side  of  the  said  rail- 
road for  a public  highway  for  carriages,  and 
for  a sidewalk  for  foot  passengers.” 

Section  11  is  as  follows: 

“Whenever  it  shall  be  necessary  for  the 
construction  of  their  single  or  double  rail- 
road or  way,  to  intersect  or  cross  any  stream 
of  water  or  water  courses,  or  any  road,  street 
or  highway,  it  shall  be  lawful  for  the  said 
corporation,  with  the  consent  and  approba- 
tion of  the  mayor,  aldermen  and  commonalty 
of  the  city  of  New  York  to  construct  their 
single  or  double  railroad  or  ways  across  or 
upon  the  same;  provided  that  the  corpora- 
tion shall  restore  the  stream  or  water  course 
or  road,  street  or  highway  thus  intersected, 
to  its  former  state,  or  in  a sufficient  manner 
not  to  have  impaired  its  usefulness,  and  shall 
moreover  erect  and  maintain  sufficient  fences 
upon  the  line  of  the  route  of  their  single  or 
double  railroad  or  ways.” 

Section  16  provides  in  part: 

“Nothing  in  this  act  shall  be  deemed  to 
authorize  the  said  corporation  to  construct 
or  use  their  single  or  double  railroad  or  way 
across  or  along  any  of  the  streets  or  avenues 
as  designated  on  the  map  of  the  city  of  New 
York,  whether  such  streets  or  avenues  shall 
have  been  opened  or  not  without  the  consent 
of  the  mayor,  aldermen  and  commonalty  of 
said  city,  who  are  hereby  authorized  to  grant 
permission  to  the  said  eor])oration  to  con- 
struct their  said  railroad  or  way  across  or 
along  said  streets  or  avenues,  or  prohibit 
them  from  constructing  the  same,  and  after 
the  same  shall  be  constructed  to  regulate  the 


time  and  manner  of  using  the  same,  and  the 
speed  with  which  carriages  shall’  be  permit- 
ted to  move  on  the  same  or  any  part  there 
of;”  * * * (Italics  ours.) 

It  is  evident  that  this  requirement  so  far  as  it 
concerned  the  unopened  i)ortion  of  Fourth  Ave- 
nue was  to  obtain  permission  to  occupy  lands 
along  which  a proposed  street  had  been  laid  out 
hut  never  opened  so  as  to  become  an  actual  street. 
Was  such  permission  when  obtained  taken  in  con- 
nection with  the  language  of  section  16,  the  grant 
of  a special  franchise  within  the  meaning  of  the 
tax  law?  The  learned  Ai)])ellate  Division  says 
that  it  was,  holding  in  effect  that  it  is  wholly  im- 
material that  the  projected  avenue  was  (iu  this 
section)  wholly  unopeiu'd  and  the  soil  thereof 
l)rivately  owned. 

AVe  say  that  this  j^osition  is  diametrically  o])- 
posite  to  the  decisions  of  this  (’ourt  hereinafter 
notice<l. 

Section  18  is: 

“The  legislature  may  at  any  time  alter, 
amend,  modify  or  repeal  this  act.” 

It  will  he  seen  that  in  order  to  comply  with  the 
conditions  of  the  legislative  grant  to  the  New 
York  and  Harlem  Railroad  Company  of  the  right 
to  build  its  railroad  within  the  limits  stated,  in 
the  city  of  New  York  three  things  were  necessary 
to  be  done: 

(1)  The  Directors  were  requin'd  to  have  sur- 
veys made  and  to  formally  adopt  the  route 
selected. 

(2)  Such  location  of  the  route  when  made  was 
required  to  be  approved  by  the  Common  Council, 


18 


this  without  regard  to  the  fact  whether  the  road 
was  to  be  located  ujjoii  an  unopened  avenue  or 
between  the  avenues,  and  across  numerous  paper 
streets  running  east  and  west. 

(3)  In  case  of  the  location  of  such  railroad 
upon  an  avenue  or  across  streets  shown  on  the 
map  of  the  city  of  New  York,  whether  such  ave- 
nue or  streets  should  be  opened  or  not,  the  con- 
sent of  the  municipal  authorities  was  required. 

It  is  next  in  order  to  inquire  what  steps  the 
New  York  and  Harlem  Railroad  Company  took  to 
comply  with  these  conditions  in  its  charter. 

A survey  of  the  route  of  said  railroad  was  duly 
made,  locating  the  said  railroad  along  the  center 
of  Fourth  Avenue,  as  laid  down  on  the  City  map. 
This  map  was  entitled  “Profile  and  map  of  the 
Fourth  Avenue  as  surveyed  for  the  contemplated 
Harlem  Railroad.  New  York,  August,  1831,”  and 
attached  thereto  was  a resolution,  as  required  by 
the  charter,  of  the  Board  of  Directors  that  this 
line  of  the  route  of  their  railroad  be  through  the 
center  of  the  line  of  Fourth  Avenue  from  the 
north  side  of  Twenty-third  Street  to  the  Harlem 
River.  Said  resolution  further  provided  that 
said  map,  previous  to  the  filing  thereof,  be  pre- 
sented to  the  Common  Council  of  the  City  of  New 
York  for  approval,  in  pursuance  of  the  require- 
ments of  said  'Act  of  incorporation. 

(See  Relator’s  Exhil)it  BBB  of  Decem- 
ber 8,  1909,  fob  1605;  Appendix,  p. 
973.) 

By  resolution  of  the  Common  Council  of  the 
City  of  New  York,  approved  by  the  INIayor  Octo- 
ber 11,  1831,  the  said  map  was  approved  u])on 
condition  that  neither  said  approval  nor  anything 
therein  contained  should  be  construed  into  a con- 


19 


sent  to  the  said  company  to  construct  the  rail- 
road, but  that  said  company  would  first  obtain  the 
consent  of  the  Mayor,  Aldermen  and  Commonalty 
of  the  City  of  New  York  before  they  commenced 
the  construction  of  said  road. 

(Relator’s  Exhibit  9,  fob  1623.) 

The  Court  at  Special  Term  found  that  this  con- 
sent did  not  constitute  a special  franchise  (fol. 
1821). 

It  will  thus  be  seen  that  the  different  character 
of  the  two  municipal  consents,  required  by  the 
Act  of  incorporation,  was  clearly  recognized  at 
the  outset. 

Fourth  Avenue,  along  the  center  line  of  which 
the  route  of  this  railroad  was  located,  at  the  time 
thereof,  was  in  this  situation : It  was  shown  upon 
a map  of  the  city,  filed  April  1,  1811,  having  been 
laid  out  by  Commissioners  appointed  in  “An  Act 
relative  to  improvements  touching  the  laying  out 
of  streets  and  roads  in  the  City  of  New  York,  and 
for  other  purposes,”  passed  April  7,  1807,  and 
known  as  and  being  Chapter  115  of  the  Laws  of 
1807. 

This  avenue  as  thus  laid  out  was  100  feet  wide, 
and  extended  from  a point  below  Twenty-tliird  * 
Street  in  said  City  northerly  to  the  Harlem  River. 

At  that  time  the  street  had  been  legally  opened 
going  northerly  only  so  far  as  Thiify-eighth 
Street.  The  portion  of  the  avenue  with  wliieli 
this  proceeding  is  concerned  from  Forty-fifth 
Street  north  to  the  Harlem  River  was  merely  a 
paper  street. 

The  Aet  incorporating  the  New  York  and  Har- 
lem Railroad  Company,  however,  required  the 
consent  of  the  municipal  authorities  to  the  occu- 
pation of  Fourth  Avenue  by  the  railroad  over  the 


20 


unopened  portion  as  well  as  over  the  opened  por- 
tions thereof,  and  steps  were  accordingly  taken 
by  the  Railroad  Company  to  secure  this  consent. 

By  ordinance  of  the  Common  Council  of  the 
City  of  New  York  passed  by  the  Board  of  Aider- 
men  on  the  16th  day  of  December,  by  the  Board  of 
Assistants  on  the  19th  day  of  December  and  ap- 
j)roved  by  the  Mayor  on  the  22nd  day  of  Decem- 
lier,  1831,  the  New  York  and  Harlem  Railroad 
Company  was  permitted  to  construct  and  lay 
down  in  pursuance  of  their  said  act  of  incorpora- 
liou  a double  or  single  track  or  railroad  or  rail- 
way along  the  Fourth  Avenue  from  Twenty-third 
Street  to  the  Harlem  River  in  conformity  with 
said  map  filed  in  the  said  register’s  office,  pro- 
vided that  the  width  of  said  double  railroad  or 
way  should  not  exceed  24  feet,  and  subject  to 
other  conditions,  all  of  which  said  New  York  and 
Harlem  Railroad  Company  by  Articles  of  Agree- 
ment dated  January  9,  1832,  duly  covenanted  and 
engaged  to  stand,  abide  by  and  perform  (fol.  186; 
Appendix  p.  775,  fol.  2323). 

The  Court  at  Special  Term  ruled  that  this  ordi- 
nance did  not  constitute  the  grant  of  a special 
franchise  (fol.  1822). 

Upon  the  execution  and  filing  of  the  said  Arti- 
cles of  Agreement  last  above  mentioned  the  New 
York  and  Harlem  Railroad  Company  made  final 
compliance  with  its  charter  conditions,  and  there- 
upon confirmed  in  itself  the  general  right  already 
conditionally  secured  from  the  Legislature  to 
locate  and  build,  maintain  and  operate,  its  rail- 
road, the  center  line  of  the  location  of  which 
coincided  with  the  center  line  of  the  partly  opened 
and  partly  unopened  street  known  as  Fourth 
Avenue  and  laid  down  on  the  city  mai).  That  the 
right  thus  secured  came  from  the  State  and  not 
from  the  City  of  New  York  is  abundantly  sus- 
taino<1  by  the  autboritios. 


21 


See 

People  vs.  Kerr,  27  X.  Y.,  188,  209  to  214 ; 

Wilcox  vs.  McClellan,  185  N.  Y.,  at  p.  16; 

Citv  of  New  York  vs.  Bryan,  196  N.  Y., 
158-63 ; 

City  of  New  York  vs.  N.  Y.  Mut.  Gas.  L. 
Co.,  135  App.  Div.,  260; 

N.  Y.  C.  ic  II.  R.  R.  R.  Co.  vs.  City  of 
New  York,  et  al.,  202  N.  Y.,  212. 

In  view  of  the  foregoing  decisions,  it  is  difficult 
to  understand  the  expression  used  in  the  opinion 
of  the  Appellate  Division  (fol.  2308n),  where  it 
is  said  of  the  relator: 

“It  is  therefore  occupying  the  street  by 
virtue  of  the  consent  of  the  city  and  its 
rights  therein  are  taxable  as  a special  fran- 
chise.” 

Before  entering  upon  the  land  over  which  its 
railroad  route  was  located,  it  still  remained  for 
the  New  York  and  Uarlem  Railroad  Company  to 
secure  from  the  owners  of  the  soil  the  necessary 
title  for  its  roadbed.  The  action  taken  in  this 
regard  and  the  legal  ellect  thereof  we  shall  dis- 
cuss a little  later  under  this  point. 

The  charter  of  the  New  York  and  llarlein  Rail- 
road Company  was  repeatedly  amended  by  sul)se- 
quent  enactments  of  the  Legislature.  The  acts 
deemed  material  were  offered  in  evidence  (fols. 
180-182).  The  amendments  with  which  we  are 
concerned  here  were  made  by 

Chapter  242  of  the  Laws  of  1840; 

Chaijter  333  of  the  Laws  of  1845; 

Chapter  195  of  the  l^aws  of  184(5; 

Chapter  200  of  the  Laws  of  1846; 

(Chapter  143  of  the  Laws  of  1848; 

Chapter  207  of  the  Laws  of  1857; 

Cha[)ter  880  of  the  Laws  of  1867; 

Chapter  919  of  the  Laws  of  186tt. 


22 


A reference  to  these  acts  will  show  that  the  gen- 
eral franchises  of  the  railroad  were  enlarged  so  as 
to  authorize  an  extension  of  its  line  first,  into  and 
through  the  County  of  Westchester  and  to  the 
Adllage  of  White  Plains,  and  subsequently  to  its 
present  terminus  at  Chatham,  in  the  County  of 
Columbia. 

The  New  York  & New  Haven  Railroad  Com- 
pany, now  known  as  The  New  York,  New  Haven 
and  Hartford  Railroad  Company,  was  specially 
authorized  to  connect  its  tracks  with  fhe  tracks  of 
the  New  York  and  Harlem  Railroad  Company  at 
Williamsbridge,  and  thus  to  gain  an  entrance  into 
the  City  of  New  York.  The  extension  of  the  New 
York,  New  Haven  and  Hartford  Railroad  as  au- 
thorized within  the  State  of  New  York  was  con- 
structed and  said  trackage  agreement  with  the 
New  York  and  Harlem  Railroad  Company,  dated 
March  17,  1848,  \Vas  entered  into,  and  has  since 
remained,  and  is  now,  in  force  (fol.^294;  Appendix 
p.  876,  fob  2626). 

This  was,  perhaps,  the  most  significant  of  the 
early  amendments  made  by  the  Legislature,  in 
that  it  made  the  New  York  and  Harlem  Railroad 
the  western  terminus  of  a trunk  line  railroad 
traversing  New  England,  and  connecting  the 
cities  of  Boston  and  New  York.  Beginning  with 
a short  line  constructed  wholly  within  the  limits 
of  the  City  of  New  York,  the  railroad  rapidly  out- 
grew its  infant  characteristics  and  became  the 
ordinary  steam  surface  railroad  extending  over 
several  counties  of  the  State  and  forming  connec- 
tions at  Chatham  with  the  Boston  & Albany  Rail- 
road, thereby  furnishing  a direct  route  between 
New  York  and  All)any,  and  furnishing  a western 
outlet  of  the  New  England  railroad  systems. 

Another  series  of  amending  acts  are  ])roperly 
noticed  in  this  connection  (fols.  181-182). 


23 


Under  Chapter  702  of  the  Laws  of  1872,  entitled 
‘ ‘ An  act  to  improve  and  regulate  the  use  of  Fourth 
Avenue  in  the  City  of  New  York,”  passed  May 
14,  1872,  the  Legislature  authorized  and  com- 
manded an  extensive  system  of  railroad  and  street 
improvements  under  the  supervision  of  a board 
appointed  by  the  Act,  and  required  the  expense 
of  the  improvement  to  be  largely  shared  by  the 
City  of  New  York. 

In  brief,  this  Act  changed  the  grade  of  the  rail- 
road, authorized  additional  main  tracks,  required 
the  elimination  of  all  grade  crossings,  and  pro- 
vided for  a physical  structure  whereby  the  rail- 
road would  be  carried  first,  in  a depressed  cut, 
then  through  a tunnel  to  about  9(ith  Street;  thence 
upon  a stone  viaduct  structure  with  parapet  walls 
to  about  115th  Street,  and  then  through  an  open 
cut  with  perpendicular  retaining  walls  to  the  Har- 
lem River.  The  result  of  this  improvement  was 
to  carry  the  cross  streets  over  the  railroad  tracks 
from  45th  to  9Gth  Streets,  to  provide  a hi-sected 
avenue  for  the  portion  where  the  tunnel  was  con- 
structed so  that  there  were,  and  are,  roadways 
on  each  side  of  a central  strip  which  contains  open- 
ings to  the  tunnel  below,  which  said  central  strip 
is  also  ornamented  by  grass  plots  and  shrub- 
bery. North  of  100th  Street  the  cross  streets 
were,  and  are,  carried  by  archways  under  the 
stone  viaduct  structure.  North  of  115th  Street 
the  original  open  cut  railroad  structure  was  con- 
siderably below  the  grade  of  the  avenue,  and  the 
cross  streets  were  carried  over  by  bridges.  The 
total  expense  of  this  improvement  was  $0,482,- 
570.80.  The  City  reimbursed  the  Railroad  Com- 
pany under  the  terms  of  this  Act  lo  the  extent  of 
$2.0*44,105.81  (fob  201-202). 

In  connection  with  the  irnprovenienl  last  above 
mentioned,  other  extensive  changes  in  the  rail- 


24 


roads  entering  Manhattan  Island  were  made.  The 
Hudson  River  Railroad  extending  from  Rens- 
selaer opposiie  the  City  of  Albany  to  (or  be- 
low) St.  John’s  Park  in  the  City  of  New  York, 
had  been  in  1869  consolidated  with  the  New 
York  Central  Railroad  extending  from  Albany 
to  Buffalo,  the  steam  line  of  The  Harlem 
Railroad  from  42nd  Street  north  was  leased 
in  1873  to  the  new  consolidated  corporation 
for  a long  term  of  years,  and  the  Spuyten 
Duyvil  & Port  Morris  Railroad,  organized  un- 
der a special  act,  was  built  within  the  limits  of 
what  is  now  the  Borough  of  The  Bronx,  City  of 
New  York,  as  a link  connecting  at  Spuyten  Duyvil 
between  the  railroad  along  the  east  bank  of  the 
Hudson  River  and  the  Harlem  Railroad.  Passen- 
ger and  freight  carrying  functions  were  differ- 
entiated so  that  the  portion  of  the  steam  line  of 
the  Harlem  Railroad  lying  south  of  the  junction 
at  Mott  Haven  with  the  Spuyten  Duyvil  and  Port 
Morris  Railroad  connecting  link,  was  used  sub- 
stantially only  for  passenger  traffic,  and  that  por- 
tion of  the  Hudson  River  Railroad  extending 
along  the  west  side  of  the  City,  south  of  Simyten 
Duyvil,  was  and  is  used  substantially,  only  for 
the  transportation  of  freight.  A large  passen- 
ger terminal  was  erected  at  42nd  Street;  Fourth 
Avenue  between  42nd  Street  and  45th  Street  hav- 
ing been  closed  by  law  and  the  land  deeded  to  the 
Railroad  Company.  The  lower  section  of  the 
original  Harlem  Railroad  operated  by  other  than 
steam  power  lying  in  Fourth  Avenue  below  42nd 
Street  was  extended  northerly  through  Madison 
Avenue,  and  now  forms  a line  of  surface  railroad 
operated  by  electricity,  and  by  lease  forms  a part 
of  the  system  of  street  railroads  operated  by  the 
]\fetro]mlitan  Street  Railroad  (''oTni)any  (si’i(*(* 


25 


foreclosure  oi)erated  by  tlie  New  York  Eailways 
Company). 

The  corporate  life  of  the  New  York  and  Harlem 
Railroad  Company  of  30  years  having  been  origi- 
nally extended  by  statute,  Chapter  387  of  the 
Laws  of  1859,  for  an  additional  term  of  30  years, 
under  Chapter  240  of  the  Laws  of  1874,  by  certifi- 
cate duly  executed  by  the  stockholders  of  said 
company,  and  filed  December  28th,  1874,  in  the 
office  of  the  Secretary  of  State,  was  further  ex- 
tended for  the  term  of  500  years  from  April  16 
1889  (page  80,  fob  239). 

As  recently  held  by  the  Court  of  Appeals,  this 
extension  applied  only  to  the  corporate  life  of 
the  Harlem  Company,  not  to  its  general  franchise 
to  operate  a railroad  between  its  termini,  viz: 
Chatham  and  New  York  City.  The  latter  is  un- 
limited in  time,  conditioned  only  upon  user. 

See 

N.  Y.  Central  & H.  R.  R.  R.  Co.  v.  The 
City  of  New  York,  202  N.  Y.,  212. 

The  Legislature  again  exercised  its  reserved 
power  to  alter  and  amend  the  charter  of  the  New 
York  and  Harlem  Railroad  Company  by  further 
acts  imposing  extensive  street  improvements. 

The  enterprise  undertaken  by  the  Federal  Gov- 
ernment, known  as  the  Harlem  Ship  Canal,  re- 
quired for  its  successful  development  the  raising 
of  the  drawbridges  crossing  the  same,  so  that 
craft  of  slight  clearance  could  be  navigated 
through  said  canal  without  necessitating  the 
opening  of  said  drawbridges. 

Fnder  Chapter  907  of  the  Acts  of  Congress  of 
the  year  1890  (fob  182),  the  bridges  crossing  the 
Harlem  River,  inclnding  the  railroad  bridge  which 
connected  the  railroad  in  Fourth  .\venue  with 


26 


the  portion  thereof  in  the  Borough  of  The 
Bronx  were  required  lo  Oe  elevated  so  as  tio 
atiord  a clearance  of  24  feet  above  the  level 
of  mean  high  tides  as  soon  as  the  neces- 
sary State  legislation  could  be  secured.  While 
this  legislation  was  pending,  the  property 
owners  ami  others  in  Harlem,  intervened,  and 
secured  amendments  to  pending  bills  which 
eventuated  in  Chapter  339  of  the  Laws  of 
1892,  entitled  “An  Act  to  regulate,  improve  and 
enlarge  Park  Avenue  above  106th  Street  in  the 
City  of  New  York.”  This  act  was  further  amend- 
ed by  Chapter  548  of  the  Laws  of  1894,  Chapter 
594  of  the  Laws  of  1896  and  Chapter  613  of  the 
Laws  of  1898. 

This  legislation,  comprehensively  stated,  com- 
manded the  destruction  of  the  railroad  structure 
in  Park  Avenue  from  the  south  line  of  111th  Street 
to  a point  near  133rd  Street,  consisting  of  the 
stone  viaduct  structure  from  111th  Street  to  115th 
Street,  and  the  depressed  cut  structure  with  per- 
pendicular retaining  walls  from  115th  Street  to 
a point  near  133rd  Street,  and  substituted  in  place 
thereof  a steel  viaduct  structure,  putting  the  base 
of  rail  some  25  feet,  more  or  less,  above  the  grade 
of  Park  Avenue,  requiring  the  removal  of  the  old 
viaduct  structure  and  the  tilling  up  of  the  de- 
pressed cut,  and  the  grading  and  paving  of  Park 
Avenue  in  the  space  formerly  occupied  by  tlie 
railroad  structures,  with  the  result  of  making 
Park  Avenue  from  111th  Street  north  traversable 
at  all  points  except  between  125th  and  126th 
Streets,  where  the  station  is  located,  and  substi- 
tuting one  street  140  feet  in  width  where  formerly 
there  had  been  two  narrow  streets  on  each  side 
of  the  railroad  structure.  Trains  have  been  oper- 
ated on  the  new  structure  since  February  16,  1897. 
The  expense  of  said  improvement,  which  was  exe- 


27 


cuted  by  a public  board  appointed  by  the  Mayor 
of  the  City  of  New  York  under  the  terms  of  said 
Chapter  339  of  the  Laws  of  1892,  was  the  sum  of 
$3,221,829.20,  of  which  amount,  as  required  by 
said  above-mentioned  acts,  the  City  of  New  Y’^ork 
reimbursed  the  railroad  company  to  the  extent  of 
$773,531.95  (fob  293). 

See  Tocci  vs.  The  Mayor,  73  Hun,  46. 

This  was  a taxpayer’s  action  to  restrain  the 
City  officials  from  paying  the  Railroad  Compan- 
ies the  sums  above  mentioned  for  the  second  im- 
provement of  Park  Avenue.  In  affirming  ah 
order  denying  the  plaintiff’s  motion  for  an  in- 
junction pendente  lite,  Van  Brunt,  P.  J.,  says,  j). 
51 : 

“It  is  entirely  immaterial  in  the  consid- 
eration of  this  question  whether  the  railroad 
company  owned  the  fee  of  the  land  which  they 
occupied  or  not.  For  all  practical  purposes 
they  were  its  absolute  owners,  and  entitled 
to  its  absolute  control  and  exclusive  use  for 
the  purposes  of  their  railroads.  It  was  for 
the  abandonment  of  these  rights,  and  the  ex- 
pense of  other  constructions  in  their  stead, 
that  the  city  was  authorized  to  make  the 
payments  provided  for  by  the  act.” 

Departing  somewhat  from  the  chronological  or- 
der we  have  completed  our  review  of  the  statutes 
which  have  been  passed  modifying  the  charter  of 
the  New  York  and  Harlem  Railroad  Comi)any, 
and  requiring  changes  in  the  physical  structure 
of  the  railroad.  Going  back  now  to  the  situation 
as  it  existed  in  1832,  and  after  the  Railroad  Com- 
pany had  filed  its  location  map  with  the  consent 
of  the  Common  Council,  and  had  entered  into  the 
agreement  of  January  9th,  1832,  with  the  City, 
it  remained  for  it  to  acfpiire  title  for  its  railroad 


28 


right  of  way  in  the  unopened  portions  of  Fourth 
Avenue.  Counsel  for  the  Intervener,  as  well  as 
for  the  Relator,  introduced  a very  large  number 
of  exhibits  tending  to  throw  light  on  the  title 
situation  in  Park,  or  Fourth,  Avenue,  over  that 
portion  thereof  occupied  by  Relator’s  railroad, 
and  which  is  claimed  to  constitute  a special  fran- 
chise. In  the  following  review  of  the  title  situa- 
tion, which  is  of  course  confined  to  that  segment 
of  Fourth  Avenue  with  which  this  proceeding  is 
concerned,  we  shall  refer  to  documents  offered  on 
l)oth  sides. 

Under  the  Dongan  and  Montgomerie  charters, 
received  in  evidence  (fols.  173-4),  the  Mayor,  Al- 
dermen and  Commonalty  of  the  City  of  New  York 
received  a grant  of  land  on  Manhattan  Island 
from  the  English  Crown,  known  as  the  “Common 
Lands.”  These  originally  extended  from  a point 
not  far  north  from  the  present  42nd  Street  to  a 
point  substantially  co-incident  with  the  present 
84th  Street;  north  of  that  point  were  the  Common 
Lands  of  the  old  Village  of  Harlem. 

After  the  close  of  the  Revolutionary  War  it  was 
deemed  desirable  that  the  City  should  utilize  this 
tract,  not  for  its  original  purpose,  which  had  be- 
come obsolete,  but  that  the  City  should  realize 
from  the  sale  of  these  lands  to  private  purchas- 
ers or  lessees.  Accordingly  it  appears  that  the 
City  Surveyor  surveyed  this  plot,  and  prepared  a 
map  thereof,  known  as  the  Goerck  IMap,  which  was 
received  in  evidence  (p.  429,  fob  1286,  and  rei)ro- 
duced  in  the  Appendix,  p.  974,  Defendants’  Ex- 
hilut  77).  In  dotted  lines  the  respective  centers 
of  the  present  numbered  cross  streets  are  deline- 
ated. Two  paper  streets  were  laid  out  on  this 
map,  kjiown  as  Middle  Road  and  East  Road; 
Middle  Road  l)eing  nearly  co-incident  with  the 
pi’esent  Fiftli  Avenue,  and  East  Road  lying  within 


29 


the  limits  of  wliat  was  subsequent!)’  Fourth 
Avenue.  It  appears  that  the  old  City  of  New 
York  sold  to  a number  of  purchasers  parcels  of 
land  as  shown,  and  nmnbered  on  this  map.  As 
appears  from  extracts  of  the  minutes  of  the  meet- 
ings of  the  Coimnon  Council  (in  evidence  pp. 
417-9,  fols.  1249-57)  some  of  these  plots  were 
sold  and  others  leased.  There  is  no  evidence,  how- 
ever, that  East  Road  was  ever  legally  opened, 
or  that  it  was  ever  a traveled  highway,  or  any 
more  than  a paper  street,  a circumstance  adverted 
to  by  the  Referee  in  his  opinion  (fob  2131). 

In  the  opinion  of  the  xVppellate  Division  it  is 
said  (at  folio  2.309k) : 

“The  evidence  indicates  that  parts  of  the 
street  were  used  more  or  less  for  public 
travel,  before  the  railroad  came,  but  mani- 
festly the  greater  part  had  not  been  so  used.  ’ ’ 

There  is  not  the  slightest  evidence  that  any 
portion  of  Fourth  Avenue  north  of  the  south  line 
of  45th  Street  had  been  used  as  a public  street,  or 
for  highway  purposes  of  any  kind,  prior  to  the 
railroad  occupation.  It  is  further  said  in  the  Ap- 
l)ellate  Division  oi)inion  (fob  2310k): 

“The  making  and  filing  of  the  map  [show- 
ing East  Road,  etc.,  on  the  Common  Lands] 
and  selling  of  the  Lots  according  to  it,  bound- 
ed on  the  road,  dedicated  the  road  as  a 
I>ublic  highway,  so  that  as  to  the  unused 
lauds  the  city  owned  them  in  its  private 
capacity  but  subject  to  the  use  of  East  Road 
by  the  juiblic  as  a highway.  As  to  the  sold 
lots  it  owned  the  fee  of  the  street  fronting 
them  subject  to  use  as  a public  street  {Gra- 
hfim  vs.  Stern,  108  N.  V.,  517).” 

The  decision  in  the  case  cited  had  no  relation  to 
the  so-called  East  Road.  It  had  to  do  only  with 


30 


the  title  to  certain  cross  streets  as  shown  on  the 
Goerck  map  which  were  not  coincident  with  the 
same  cross  streets  as  laid  out  on  the  map  filed  in 
1811.  There  was  an  overlapping  of  side  lines. 
The  City  subsecpiently  arranged  with  the  owners 
to  rectify  this  situation  by  an  exchange  of  gores. 
Tile  ruling  in  Gruliam  vs.  Stem,  was  that  the 
City  retained  title  to  the  beds  of  the  streets  con- 
tiguous to  the  lots  sold  (contrary  to  the  usual 
rule)  and  the  dispute  between  the  parties  to  the 
suit  was  resolved  accordingly.  It  is  no  authority 
for  the  proposition  that  East  Road  became  a 
public  street  with  all  its  attributes  prior  to  the 
entry  of  the  New  York  and  Harlem  Railroad 
Company. 

In  Leivis  vs.  N.  Y.  & Harlem  R.  R.  Co.  et  al 
(162  N.  Y.,  202),  it  appeared  that  the  portion  of 
Park  Avenue  with  the  abutting  lots  involved  in  the 
ease,  extending  lietween  106th  and  115th  streets, 
had  been  surveyed  and  mapped  by  the  owner,  Ben- 
son, the  map  filed  in  the  Register’s  office,  and  deed 
of  cession  of  the  land  comprising  the  bed  of  Park 
or  Fourth  Avenue,  delivered  to  and  accepted  and 
recorded  by  the  Mayer,  etc.,  of  New  York,  and  the 
abutting  lots  sold  to  the  plaintiff’s  predecessor  in 
title  all  prior  to  the  entry  of  the  New  York  and 
Harlem  Railroad  Company.  This  Court,  however, 
held  that  while  Benson’s  grantees  of  the  abutting 
lots  got  an  easement  of  passage,  the  street  had  no 
existence  as  such  until  the  opening  proceedings 
taken  in  1850  were  consummated.  Vaxx,  J.,  says 
at  p.  219 : 

“The  avenue  was  not  opened  and  built 
upon,  as  such,  l)ut  was  a street  on  paper 
only.’’  * * * 

“There  is  no  evidence  as  to  the  character 
of  the  original  entry  into  tlie  street  l)y  the 
Harlem  Com])any  or  the  nature  of  its  claim 


31 


when  or  after  entering,  except  as  it  may  be 
inferred  from  the  facts  above  mentioned 
and  the  subsequent  occupation  and  use  for 
railroad  purposes  of  a portion  of  the  ave- 
nue, which  was  a street  in  posse  only  and  did 
not  become  a street  in  esse  until  twenty 
years  later.” 

The  Lewis  case  further  decided  that  the  Rail- 
road Company  entered  this  portion  of  Park  Ave- 
nue under  the  same  license  from  the  City  whereby 
it  entered  oji  the  section  of  Park  Avenue  running 
through  the  Common  Lands.  The  trial  court 
ruled  accordingly  that  such  license  did  not  con- 
stitute a special  franchise  within  the  meaning  of 
the  tax  law  (fol.  1824). 

Pursuant  to  Chapter  115  of  the  Laws  of  1807 
(fol.  171)  Commissioners  were  api)ointed  to  make 
a survey  and  map  of  the  Island  of  Manhattan, 
including  those  portions  north  of  the  then  limit 
of  settlement,  which  was  somewhere  north  of 
Canal  Street.  The  Commissioners  completed 
their  task,  and  the  map  was  filed  as  required 
about  April  1,  1811  (fol.  179).  The  present  street 
system  of  the  Borough  of  ]\Ianhattan,  City  of  New 
York,  was  determined  by  this  map.  Fourth  Ave- 
nue was  delineated  thereon,  and  as  already  stated 
the  old  East  Road  as  shown  on  the  Goerck  sur- 
vey was  substantially  included  within  the  limits 
of  Fourth  Avenue  (the  lines  of  the  two  surveys 
not  harmonizing  entirely),  which  was  laid  out  100 
feet  in  width,  whereas  East  Road  was  laid  out 
00  feet  in  width.  Fourth  Avenue  extended  clear 
through  to  the  Harlem  River,  while  East  Road 
naturally  ended  with  the  then  northerly  line  of 
the  City  of  New  York  near  84th  Street. 

There  is  not  the  slightest  question  that  the  land 
comprising  the  bed  of  Fourth  Avenue  from  4r)th 


Street  to  84tli  Street  was  owned  by  the  Mayor, 
Aldermen  and  Coimnonaity  of  the  City  of  New 
York. 

See  Graham  vs.  Stern,  168  N.  Y.,  517. 

From  81th  Street  to  a point  between  91st  and 
92nd  Streets,  and  for  a considerable  distance  east 
and  west  thereof  lay  a tract  of  land  known  origi- 
nally as  the  “Harlem  Commons.”  This  tract 
came  into  possession,  prior  to  the  organization 
of  the  New  York  and  Harlem  Railroad  Company, 
of  one  Dudley  Selden  (p.  132,  fob  1296;  printed 
in  Appendix  p.  977).  From  91th  Street  north  to 
the  Harlem  River,  Fourth  Avenue  was  laid  out 
over  various  tracts  of  farm  lands  belonging  to 
private  parties ; in  some  instances,  as  we  shall  see, 
the  tracts  had  been  mapped  and  plotted  with  ref- 
erence to  the  City  map  and  deeds  dedicating  the 
land  comprising  the  bed  of  Fourth  Avenue  as 
shown  on  the  City  map  had  been  delivered  to  the 
City.  We  shall  examine  these  matters  more  in 
detail  hereafter. 

We  will  take  up  now  in  order  the  effort  which 
the  New  York  and  Harlem  Railroad  Company 
made  to  acquire  the  title  to  the  unopened  por- 
tions of  Fourth  Avenue  for  the  purpose  of  its 
railroad,  confining  our  examination  to  that  por- 
tion of  Fourth  Avenue  involved  in  the  present 
proceeding.  By  reason  of  the  complication  of  the 
title  situation,  as  shown  by  the  large  number  of 
deeds  and  maps  that  were  offered  in  evidence  by 
both  sides,  it  was  deemed  advisable  to  assemble 
all  of  the  muniments  of  title  received  in  evidence, 
reducing  the  scales  employed  in  the  various  ma])S 
to  a uniform  scale,  and  present  with  as  much  ac- 
curacy as  possible  this  title  situation  in  a single 
exhibit.  Mr.  Haviland,  an  engineer  in  the  em- 
ploy of  the  Relator,  completed  this  task,  and  his 
work  is  embodied  in  a series  of  ma])S  received  in 


evidence  and  marked  “Exhibit  AAA”  (p.  534, 
fob  1601,  reproduced  in  the  Appendix  p.  972). 
The  original  colors  in  these  maps  have  been  re- 
produced by  lithography.  The  maps  also  reflect 
the  damage  map  in  the  condemnation  proceeding 
taken  by  the  City  in  1850  to  open  Park  Avenue, 
containing  notations  showing  the  various  convey- 
ances or  other  muniments  of  title.  From  the  south 
line  of  45th  Street  to  the  then  south  line  of  the 
lands  of  the  corporation  of  Xew  York,  namely 
the  Common  Lands,  which  was  about  50  feet 
north  of  4Sth  Street,  the  bed  of  Fourth  Avenue 
was  owned  by  Ahny  Buchanan  and  others,  and 
the  Railroad  Company  acquired  title  thereto  by 
a condemnation  ]iroceeding  (i)arcel  2nd),  and 
paid  a substantial  award  for  such  title  (fob  218). 

There  was  evidently  some  doubt  in  tlie  minds 
of  the  projectors  of  the  New  York  and  Harlem 
Railroad  as  to  whether  the  agreement  made  with 
the  City  dated  January  9,  1832,  could  be  regarded 
as  the  permission  of  the  Mayor,  Aldermen  and 
Commonalty  of  tlie  City  of  New  York  in  its  ca- 
pacity as  a private  corporation  to  occupy  lands, 
tlie  title  to  which  was  vested  in  the  City  of  New 
York  in  such  private  capacity.  Accordingly  a ))e- 
tition  was  addressed  to  the  Common  Council  (p. 
346,  fob  1037)  by  the  oflicers  of  the  New  York 
and  Harlem  Railroad  Company,  in  which  they 
prayed  that  the  Common  Council  would  author- 
ize them  to  take  possession  of  the  ground  owned 
by  the  Common  Council,  over  which  they  had 
laid  out  the  line  of  their  railroad,  and  to  proceed 
with  the  construction  of  their  road.  Pursuant  to 
this  request  by  ordinance  approved  by  the  May- 
or February  1,  1832  fp.  348,  fob  1043),  it  was 

“ Itpsolvrrl , That  the  New  York  and  Har- 
lem Railroad  Company  be,  and  are  hereby 


34 


antliorized,  to  take  possession  of  the  ground 
owned  liy  the  Common  Council,  over  wliicli 
the  line  of  said  Railroad  is  ordered  to  be  con- 
structed, and  that  they  he  permitted  to  use 
the  same  during  the  continuance  of  the  pres- 
ent charter,  for  the  purpose  of  a railroad,  and 
that  only;  and  when  they  cease  so  to  use  it, 
it  shall  revert  to  the  Corporation;  provided 
always,  that  said  land  shall  be  so  used  as  not 
to  interfere  with  the  use  of  the  cross  streets, 
and  on  condition,  however,  that  if  the  said 
Corporation  shall  not  commence  said  rail- 
road, and  complete  the  same  within  the  time 
limited  by  their  charter,  then  the  privilege 
hereby  granted  shall  cease  and  be  void.” 

This  was  the  so-called  license  considered  by 
this  Court  in  the  Leiris  case  (162  N.  Y.  202). 

The  Court  ruled  (as  already  noted)  that  this 
consent  did  not  constitute  the  grant  of  a special 
franchise,  but  was  merely  a permission  of  the 
City  to  occupy  lands  owned  by  it  in  its  private 
capacity  (fob  1824). 

The  learned  Appellate  Division  says  (fob 
2310m)  : 

‘‘Aside  from  the  consent  of  the  local  au- 
thorities, it  [the  railroad  company]  was  a 
trespasser  in  the  avenue.  As  the  relator’s 
right  in  the  street  came  from  the  consent  and 
permission  of  the  City,  the  lajise  of  time  docs 
not  create  an  adverse  use  which  prejudices 
or  destroys  the  City’s  rights.  The  Comi)any 
held  all  the  while  under  the  City” 

We  have  already  i)ointed  out  that  the  City  of 
itself  had  no  right  to  devote  one  of  its  public 
streets  to  railroad  i)uri)oses — that  right  could 
alone  proceed  from  the  State.  So  far  as  the  ront(‘ 


of  the  railroad  lay  over  property  privately  owned 
by  the  City  it  had  the  same  right  to  grant  occu- 
pation to  tlie  railroad  as  any  other  private  owner 
would  have.  As  to  portions  of  the  avenue,  title 
to  which  was  not  vested  in  the  City  in  its  private 
capacity,  the  railroad  company,  without  the  City’s 
consent,  would  have  been  not  a trespasser  but  it 
would  not  have  complied  with  one  of  the  condi- 
tions of  its  charter.  Of  course,  as  to  lauds  owned 
by  private  iiarties  it  would  have  been  a trespasser 
if  it  had  entered  without  their  consent,  whether 
or  not  the  City  had  consented. 

By  reference  to  the  Haviland  map.  Relator’s 
Exhibit  AAA  (Appendix  pp.  964-965)  and  as  al- 
ready stated  it  will  be  observed  that  a tract  of 
land  originally  the  Harlem  Commons,  extending 
from  about  the  center  line  of  84th  Street  to  about 
the  center  of  91st  Street  as  laid  out  on  the  City 
map,  had  been  vested  in  one  Dudley  Selden  prior 
to  the  incorporation  of  the  New  York  and  Harlem 
Railroad  Company.  Selden  had  caused  his  tract 
to  be  surveyed  into  lots  with  reference  to  the  City 
map  and  had  sold  off  nearly  all  of  the  lots  abut- 
ting on  Fourth  Avenue  within  the  limits  of  his 
tract.  Many  of  these  deeds  conveyed  with  the 
lots  all  right,  title  and  interest  of  Selden  in  the 
bed  of  Park  Avenue  to  the  center  line  thereof 
opposite  the  resi)ective  lots.  In  other  eases  Sel- 
den conveyed  the  lots  by  reference  to  the  numb(!rs 
of  a map  filed  in  the  Register’s  office,  and  did  not 
in  terms  convey  his  title  to  the  bed  of  h^ourth 
Avenue  to  the  center  line  thereof  opf)osite  such 
lots. 

It  will  be  noted  on  the  Haviland  map  that  the 
attempt  is  made  to  indicate  the  title  situation  by 
coloring.  Parcels  shaded  in  red  were  conveyed 
prior  to  Selden ’s  tlced  to  the  New  York  and  Har- 
lem Railroad  Company  hereinafter  mentioned. 


36 


Parcels  shaded  in  green  were  conveyed  by  deeds 
dated  subsequent  to  the  date  of  the  deed  from 
8elden  to  the  New  York  and  Harlem  Railroad 
Company.  Wherever  in  the  deeds  dated  prior  to 
the  deed  to  the  Railroad  Company  Selden  con- 
veyed his  title  in  the  bed  of  Fourth  Avenue,  the 
central  24-foot  strip  subsequently  conveyed  to 
the  New  York  and  Harlem  Railroad  Company  is 
left  without  coloring;  wherever  in  the  deeds  dated 
prior  to  the  deed  to  the  New  York  and  Harlem 
Railroad  Company  there  is  no  conveyance  in  ex- 
])ress  words  of  Selden ’s  title  to  the  bed  of  Fourth 
Avenue,  and  also  wherever  deeds  were  granted 
subsequent  to  the  deed  to  the  New  York  and  Har- 
lem Railroad  Company,  or  deeds  were  obtained 
by  the  New  York  and  Harlem  Railroad  Company 
from  Selden ’s  grantees,  the  central  24-foot  strip 
is  colored  yellow. 

On  January  18,  1832,  Selden  conveyed  to  the 
New  York  and  Harlem  Railroad  Company  a strip 
of  land  24  feet  in  width  the  center  line  of  which 
was  coincident  with  the  center  line  of  Fourth 
Avenue  as  laid  down  on  the  city  map  from  84th 
Street  to  91st  Street,  together  with  the  right  to 
slope  embankments  and  excavations  sufficient  to 
support  the  work  Init  not  to  exceed  the  then  width 
of  the  avenue,  100  feet  (fols.  62,  197). 

The  officers  of  the  Railroad  Company  being 
aware,  to  some  extent,  of  the  title  situation,  in  the 
Selden  tract  obtained  deeds  from  some  of  Sel- 
den’s  grantees  of  the  stri]^  of  land  12  feet  in  width 
comprising  that  half  of  the  railroad  road-bed  on 
the  side  nearest  their  lots;  that  is  to  say,  deeds 
were  obtained  from  Benjamin  iMcCready  dated 
January  18,  1832,  David  Graham,  William  AVeed 
and  Frederick  AYeed,  dated  February  23,  1832 
(fols.  187-189;  199-20.’5).  It  therefore  remains  as 


an  obvious  conclusion  that  the  Eailroad  Company 
did  not  acquire  title  to  the  entire  stretch  of  road- 
bed between  84th  and  hist  Streets  from  the  then 
owners. 

Beginning  at  91st  Street  the  Eailroad  Company 
got  a deed  (fols.  189,  207)  from  Matilda  Flanagan 
dated  January  18,  1832,  of  a small  portion  of  the 
right  of  way  opposite  the  plot  at  the  northwest 
corner  of  91st  Street  and  Fourth  xVvenue  as  shown 
on  the  Haviland  map.  From  91st  Street  to  a 
point  about  midway  between  93rd  and  94th 
Streets  there  is  a gap  in  the  continuity  of  title. 
If  the  company  obtained  a deed  to  such  property 
it  was  not  found  in  the  company’s  archives  and 
was  not  introduced  in  evidence. 

From  a point  about  midway  between  93rd  and 
94th  Streets  to  a point  coincident  with  the  north- 
erly line  of  97th  Street  as  laid  out  on  the  city  map 
the  land  in  question  was  vested  in  one  Archibald 
Watt,  who  granted  the  24-foot  strip  with  the  right 
to  slope  embankments  and  excavations  (fols.  190, 
210),  this  form  of  deed  being  sul)stantially  the 
same  in  all  the  grants  to  the  New  York  and  Har- 
lem Eailroad  Company. 

From  the  north  line  of  97th  Street  to  a point 
just  north  of  the  south  line  of  lOGth  Street  ]\rar- 
garet  McCown  was  the  owner  of  the  farm  or  tract 
of  land  I)etween  the  limits  stated  including  the 
bcfl  of  Fourth  Avenue,  ami  conveyed  the  24-foot 
strip  with  slope  rights  to  Hie  New  York  ami  Har- 
lem Ttailroad  Compajiy  by  deed  dated  January 
18,  18.32  (fols.  191,  211).  The  legal  effect  of  this 
deerl  was  considered  by  the  Court  of  Afipeals  in 
tbe  case  of  Covaherr  vs.  The  N.  Y.  Covtral  rnid 
Jfiifison  //.  If.  Co.  (loG  N.  Y.,  474),  which  case 
will  be  hereafter  examined. 

From  the  northerly  limits  of  the  McOown  tract 
to  about  tbe  eenter  fif  107th  Street,  a distance  of 


38 


one  block  as  shown  on  the  city  map,  the  space  was 
occupied  by  what  was  known  as  the  Harlem  Pond. 
AVhether  or  not  the  McGown  deed  covered  any 
part  of  the  bed  of  this  pond  is  uncertain.  No 
muniment  of  title  directly  conveying  the  bed  of 
this  pond  has  been  found  in  the  archives  of  the 
company  or  introduced  in  evidence. 

From  the  northerly  shore  of  the  Harlem  Pond, 
a point  nearly  coincident  with  the  center  line  of 
107th  Street,  to  a point  in  the  center  of  the  Old 
Koad — now  extinct — which  crossed  Fourth  Ave- 
nue at  a point  just  north  of  115th  Street,  as  shown 
on  the  city  map,  the  original  tract  or  farm  owner 
was  one  Benjamin  L.  Benson.  It  appears  that 
Benson  had  his  tract  surveyed  into  lots  with  ref- 
erence to  the  avenues  and  streets  shown  on  the 
city  map,  and  delivered  to  the  city  a deed  of  ces- 
sion of  the  bed  of  Fourth  Avenue  then  100  feet 
wide,  together  with  the  beds  of  other  streets  and 
avenues  shown  on  the  city  map  intersecting  his 
tract,  in  trust  for  street  ]mrposes,  which  deed 
dated  November  19,  1825,  was  duly  recorded  in 
the  Eegister’s  office,  Lilier  196  of  Conveyances, 
page  261,  December  6,  1825,  and  the  deed  was 
received  in  evidence  (fob  1046)  and  is  set  forth 
in  full  on  the  record  (p.  349,  fob  1047). 

AVhen,  therefore,  Benson  delivered  to  the  New 
York  and  Harlem  Eailroad  Company  his  deed  of 
the  24-foot  strip  through  the  tract  which  he  had 
originally  owned  (fols.  191,  213)  he  had  parted 
with  title  to  the  lands  purporting  to  ])e  conveyed. 
That  he  still  had  an  interest,  by  reason  of  the 
reservation  contained  in  the  deed  to  the  city,  to 
convey  to  the  New  York  and  Harlem  Eailroad 
Company  is  found  by  the  Court  of  Ap])eals  in  the 
case  of  Lncis  vs.  The  X.  I^.  ffi  Tlnrlem  R.  R.  Co. 
(162  N.  Y..  202),  Judge  A'nim  spying  at  p.  219: 


39 


“Benson  had  conveyed  the  entire  avenue 
to  the  cit5’  for  street  purposes  reserving  cer- 
tain rights,  and  after  thus  conveying  to  the 
city  had  assumed  to  convey  said  strip  to  the 
Harlem  Company  exclusively  for  railroad 
purposes,  but  the  conveyance  was  effective 
only  as  to  his  reserved  rights.” 

The  Lewis  ease  is  further  authority  for  the 
proposition  that  the  railroad  company  entered 
into  possession  of  that  part  of  Fourth  Avenue 
comprised  within  the  Benson  tract  under  the  au- 
thority of  the  city  hereinabove  quoted  contained 
in  the  ordinance  approved  February  1,  1832. 
Judge  Vann  says  at  pp.  220-221 : 

“The  entry  by  the  Harlem  Company  was 
by  the  express  permission  of  the  city,  under  a 
resolution  which  recited  that  the  land  entered 
upon  was  at  the  time  owned  by  the  city.” 

It  seems  appropriate  here  to  point  out  that  the 
fact  of  ownership  of  the  common  lands  by  the  city 
as  being  the  occasion  for  securing  the  authority 
embodied  in  the  resolution  ai)proved  February  1, 
1832,  was  not  before  the  Court  of  Appeals  in  the 
Lewis  case,  nor  was  the  point  presented  to  the 
Court  that  as  the  right  to  occupy  Fourth  Avenue, 
whether  opened  or  unopened,  was  conferred  upon 
the  New  York  and  Harlem  Railroad  Company  by 
the  Legislature  and  not  by  the  city,  the  city  had 
no  power  or  authority  to  give  any  rights  in  the 
streets  except  as  specifically  conferred  by  the  act 
incorporating  the  New  York  anrl  Harlem  Rail- 
road Company,  and  that,  therefore,  while  the  au- 
thority of  the  city  in  the  ordinance  approved  Feb- 
ruary 1,  1832,  was  properly  given  as  to  the  com- 
mon lands  which  it  owned  in  a private  capacity, 
such  authority  could  have  no  proper  relation  to 


40 


the  lands  which  the  city  had  acquired  in  trust  for 
street  purposes.  We  do  not  mean  to  question  the 
authority  of  the  Lewis  case,  but  merely  to  explain 
the  situation  under  which  the  decision  was  ren- 
dered. For  the  purposes  of  this  case  the  relator 
is  constrained  to  rely  not  only  upon  the  Benson 
deed  but  upon  the  resolution  of  the  Common  Coun- 
cil approved  February  1,  1832,  for  a right  of 
its  lessor  to  enter  upon  and  construct  the  portions 
of  its  railroad  upon  the  Benson  tract. 

From  the  center  of  the  Old  Road,  practically 
midway  between  115th  and  116th  Streets  to  a 
lioint  substantially  coincident  with  the  centei 
of  121st  Street,  the  original  tract  or  farm  owner 
was  one  Peter  Poillon.  Peter  Poillon  following 
the  lead  of  his  neighbor,  Benjamin  L.  Benson,  had 
his  tract  surveyed  into  lots  with  reference  to  the 
streets  shown  on  the  city  map,  and  gave  the  city 
a similar  deed  of  cession  of  the  lands  in  the  beds 
of  the  streets  intersecting  his  tract,  including  the 
bed  of  Fourth  Avenue.  This  was  by  deed  dated 
July  24,  1827,  which  was  never  recorded,  but  was 
produced  from  the  office  of  the  Comi)troller  of  the 
city.  The  same  was  received  in  evidence  (fol. 
1063)  and  is  set  forth  at  pages  355  to  357  of  the 
record.  Although  the  Poillon  cession  deed  was 
not  recorded,  there  may  be  a presumption  of  ac- 
ceptance on  the  part  of  the  city  from  the  fact  that 
it  was  found  in  the  custody  of  the  Comptroller, 
and  in  subsequent  street  opening  proceedings  the 
strips  of  land  comprising  those  portions  of  the 
bed  of  Fourth  Avenue  within  the  100-foot  liinits 
of  the  street  on  each  side  of  the  New  York  and 
ITarlem  Railroad  Company’s  right  of  way  are 
marked  “ceded,”  just  as  in  the  case  of  the  Ben- 
son cession.  It  must,  therefore,  be  assmned  that 
the  right  of  the  New  York  and  ITarlem  Railroad 
Company  to  enter  upon  that  portion  of  its  right 


41 


of  way  across  the  Poillon  tract  was  similarly  de- 
rived from  the  authority  of  the  city  embodied  in 
the  ordinance  approved  February  1,  1832,  as  well 
as  from  the  Poillon  deed  to  the  Harlem  Company 
(fols.  192,  215)  of  the  24-foot  strip. 

From  abont  the  center  line  of  121st  Street,  be- 
ing the  northerly  boundary  of  the  Poillon  tract, 
to  a point  known  as  the  center  of  the  Old  Road, 
which  was  not  cpiite  coincident  with  124th  Street, 
the  tract  of  land  including  the  bed  of  Fonrth  Ave- 
nue as  laid  down  on  the  city  map,  was  vested  in 
an  infant,  Sampson  Adolphus  Benson,  and  the 
Railroad  Company  in  the  same  proceeding  in 
which  it  acquired  title  to  the  portion  of  its  right 
of  way  between  45th  Street  and  48th  Street  simi- 
larly acquired  (parcel  first  in  order)  the  title  of 
Benson  between  121st  Street  and  the  center  of  the 
Old  Road  near  124th  Street,  paying  a substantial 
award  which  was  made  by  the  Commissioners  ap- 
pointed in  the  proceeding  by  the  ^"ice-Chancellor 
as  outlined  in  the  act  incorporating  the  Xew  York 
and  Harlem  Railroad  Company  (fols.  193,  217). 

IVorn  about  the  south  line  of  124th  Street,  being 
the  northerly  boundary  of  the  Sampson  Adolphus 
Benson  premises,  to  a point  just  south  of  127th 
Street,  the  lands  comprising  the  bed  of  Fourth 
AvoTUie,  and  adjacent  tei-ritory,  were  owned  l)y 
Isaac  Adriance;  north  of  that  point  the  lands 
were  owned  princij)ally  by  Cliarlcs  Henry  Hall. 
It  appears  that  on  January  16,  1828,  Isaac  Adri- 
ance, Michael  Floy  and  Charles  Heniy  Hall  ceded 
to  the  city  that  portion  of  Fourth  Avenue  to  the 
width  of  100  feet  as  shown  on  the  city  map,  cover- 
ing that  portion  of  their  respective  tracts  which 
extended  from  the  north  line  of  125th  Street  to 
the  north  line  of  129th  Street  in  trust  for  street 
purposes.  This  deed  was  not  recorded  but  was 
produced  from  the  custody  of  the  Comptroller  of 


42 


the  City  of  New  York,  received  iu  evidence  (fol. 
lu72)  and  is  set  fortn  at  pages  358-359  of  the 
record.  Tins  deed,  however,  did  not  affect  that 
portion  of  the  Adriance  tract  which  extended  from 
the  center  of  the  Old  Road  near  the  south  line  of 
124th  Street  to  the  north  line  of  125th  Street; 
nor,  similarly,  did  it  affect  that  portion  of  the 
Charles  Henry  Hall  tract  extending  from  the 
north  line  of  129th  Street  to  the  Harlem  River. 
Both  Adriance  and  Hall,  and  one  Michael  Floy, 
gave  the  usual  deed  to  the  New  York  and  Harlem 
Railroad  Company,  dated  January  18,  1832  (fols. 
193-195;  227-231),  conveying  the  strip  of  land  24 
feet  in  width  with  the  right  to  slope  embankments 
and  excavations.  Hall’s  ownership  extending  from 
a point  just  south  of  the  south  line  of  127th  Street 
where  the  line  of  Isaac  Adriance  ended,  to  the 
Harlem  River  (fols.  195,  233).  Hall  had  conveyed 
in  1828  the  lots  on  the  west  side  of  Fourth  Ave- 
nue as  laid  down  on  the  city  map,  extending  from 
129th  to  130th  Streets,  to  J.  G.  Russell  (fol.  1175), 
and  it  is  claimed  that  this  deed  carried  the  title 
to  the  center  of  Fourth  Avenue  in  front  thereof 
(see  Caldivell  vs.  Neiv  York  <&  Harlem  Railroad 
Company,  111  App.  Div.,  164).  We  do  not,  how- 
ever, so  understand  that  decision.  It  amounted 
to  this,  that  Hall,  having  conveyed  these  lots  prior 
to  his  deed  to  the  New  Y’’ork  and  Harlem  Railroad 
Company,  tlie  easements  in  Fourth  Avenue  ap- 
purtenant to  said  lots  were  unaffected  by  his  deed 
to  the  Harlem  Company,  in  that  respect  differen- 
tiating the  Conaheer  case  (156  N.  Y.,  474). 

As  to  the  portions  of  these  respective  tracts  not 
theretofore  ceded  to  tlie  city,  tlie  deeds  were  un- 
questionably valid  and  effective  to  vest  in  the  New 
York  and  Harlem  Railroad  Company  the  title  to 
its  roadbed.  Tlie  validity  of  these  titles  was  re- 
peatedly passed  upon  by  the  courts  in  the  so- 


43 


called  Park  Avenue  X'iaduct  Litigation,  brought 
by  abutting  owners  by  reason  of  the  elevation  of 
the  tracks  pursuant  to  Chapter  339  of  the  Laws 
of  1892,  and  amending  acts.  Thus,  in  the  Birrell 
case  (41  App.  Div.,  506)  as  in  the  Conaheer  case 
(156  X.  Y.,  474)  it  was  held  that  as  to  the  respec- 
tive properties  the  title  acquired  by  the  Company 
to  the  strip  of  laud  24  feet  in  width  under  the 
muniments  of  title  above  mentioned,  was  absolute, 
and  authorized  the  erection  of  any  lawful  railroad 
structure  upon  the  strip  of  land  in  question  with- 
out liability  to  the  abutters,  the  successors  in  title 
respectively  of  Margaret  McGown  and  Sampson 
Adolphus  Benson. 

The  learned  counsel  for  the  Intervenor  City 
of  New  Y'ork,  has  laid  great  stress  in  his  brief 
and  arguments  on  the  claim  that  the  Company 
did  not  secure  a complete  and  unassailable  title 
from  the  private  owners  (except  the  City)  of  the 
bed  of  the  avenue  to  the  extent  required  for  its 
railroad.  But  how  does  such  omission  or  failure 
create  a special  franchise?  By  what  legal  magic 
is  an  outstanding  title  in  a private  owner  con- 
verted into  aSi  open  public  traveled  street  or 
highway  so  as  to  make  the  strip  of  land  in  ques- 
tion a special  franchise  within  the  meaning  of  tin* 
tax  law? 

Summing  up,  tlien,  the  title  situation  from  tin* 
south  line  of  45th  Street  to  the  Harlem  River,  we 
find  that  with  slight  exceptions,  which  need  not 
be  discussed  now,  the  right  of  the  company  to  use 
this  strip  of  land  then  comprising  a part  of  th(‘ 
bed  of  the  paper  street  was  derived  in  the  main 
from  two  sources: 

(1)  T>y  title  acquiretl  by  deed  or  condemnation 
from  private  owners; 

12)  By  authority  of  the  City  einbodied  in  the 
resolution  aj)y)rovefl  by  the  Mayor  February  I, 
1832. 


44 


At  this  stage  of  the  proceedings  the  Railroad 
Company  had  accomplished  two  results : it  had 
(1)  complied  with  the  terms  of  its  charter  so  as  to 
vest  in  it  the  general,  not  special,  franchise,  con- 
ferred by  the  State  of  New  York  to  build  its  rail- 
road, and  maintain  and  operate  the  same  upon 
that  portion  of  Fourth  Avenue,  being  then  a pa- 
l)er  street,  extending  from  the  south  line  of  45th 
Street  to  the  Harlem  River;  and  (2)  it  had  sub- 
stantially secured  the  whole  of  its  right  of  way 
from  the  owners  of  the  soil  by  deeds,  and  other 
muniments  of  title,  competent  to  vest  in  the  com- 
pany such  title  for  the  purposes  of  its  railroad. 

We  are  now  brought  in  the  examination  of  the 
history  of  this  railroad  to  the  point  where  it  took 
possession  of  its  roadbed  thus  secured,  and  pro- 
ceeded with  the  construction  of  its  railroad. 

The  facts  relating  to  this  stage  of  the  enterprise 
are  so  remote  as  to  antedate  the  memory  of  living 
men,  and  we  are  consequently  relegated  to  ancient 
documents  to  secure  such  light  as  they  will  shed 
upon  the  circumstances.  We  find  in  the  minute 
book  of  the  Directors  of  the  New  York  and  Har- 
lem Railroad  Company  numerous  entries  showing 
the  executive  methods  employed  in  effecting  the 
construction  of  the  railroad,  and  the  dates  at 
which  different  acts  in  the  progress  of  the  con- 
struction were  performed.  Under  the  authority 
of  Tlamerschlafi  vs.  Dun/ea  (58  App.  Div.,  268, 
291,  affirmed  without  opinion,  172  N.  Y.,  622),  the 
Relator  introduced  m evidence  (fob  1590)  certi- 
fied excerpts  from  the  minutes  of  the  Board  of 
Directors  covering  this  ])eriod,  the  same  being 
marked  Relator’s  Exhibit  No.  92  of  Noveml)er  8. 
1909,  yn’inted  in  the  Ayipendix  (p.  898,  fob  2692). 
The  general  ])nryiose  in  getting  these  facts  before 
the  Court  was  to  show  tliat  the  New  York  and 


45 


Harlem  Railroad  Company  through  its  agents  and 
contractors  had  entered  into  actual  occui)ation  of 
the  strip  of  land  acquired  for  railroad  purposes 
along  the  center  line  of  Fourth  Avenue  as  laid 
down  on  the  city  map,  from  the  south  line  of  45th 
Street  to  the  Harlem  River  more  than  20  years 
before  the  proceedings  suhsequently  taken  in  1850 
under  the  act  of  1813,  and  amending  acts,  for 
opening  Fourth  Avenue  as  a public  street  were 
consummated  by  final  order  entered  in  October, 
1853.  These  proceedings  will  be  hereinafter  con- 
sidered. The  present  consideration  is  that  it 
seemed  desirable  to  show  an  adverse  possession 
of  land  hereinbefore  mentioned  as  to  which  a])- 
parently  no  muniments  or  imperfect  muniments 
of  title  were  secured  by  the  company. 

It  appears  from  these  excer])ts  of  the  minutes 
that  as  early  as  February  1,  1832,  sealed  pro- 
posals had  been  advertised  for  the  grading  of  the 
track,  and  that  on  that  date  the  engineer  of  the 
road  presented  to  the  Hoard  his  estimate  of  the 
cost  of  constructing  the  railroad^  in  which  esti- 
mate the  railroad  was  divided  into  seven  sections, 
as  follows  tfols.  2705  to  2712) : 

Section  1.  From  north  side  of  23rd  Street  to 
north  side  of  30th  Street. 

Section  2.  From  north  side  of  30th  Street  to 
north  side  of  58th  Sti'cot. 

Section  3.  From  north  side  of  58th  Street  to 
south  side  of  73rd  Street. 

Section  4.  F"roin  south  side  of  73rd  Sti'cet  to 
south  side  of  84th  Street. 

Section  5.  From  south  side  of  84th  Street  to 
south  side  of  111th  Street. 

Section  G.  From  south  side  of  111th  Street 
to  south  side  of  124th  Street. 

Section  7.  From  south  side  of  124th  Street 
to  Harlem  River. 


At  a meeting  of  the  Directors  on  February  16, 
1882  (fob  2714),  the  committee  appointed  to  look 
over  the  proposals  of  bidders  rendered  its  report, 
and  the  contracts  for  construction  were  awarded 
hj'  the  Board  to  various  contractors  for  the  dif- 
ferent sections  1 to  7 inclusive  as  shown  on  page 
909,  fob  2725.  These  contractors  were  as  follows: 

Section  1.  Bernard  McCafferty. 

Section  2.  Path.  McCafferty. 

Section  3.  Path.  & Jas.  Moore. 

Section  4.  Path.  McCafferty. 

Section  5.  Geo.  J.  Dickey  & Co. 

Section  6.  Geo.  J.  Dickey  & Co. 

Section  7.  Me.  Tally  & J.  Devlin. 

A motion  was  made  at  this  meeting  that  the 
contractors  be  set  to  work  forthwith,  working  it 
to  the  width  of  24  feet  (fob  2784). 

It  appears  from  the  minutes  of  the  meeting  of 
April  24,  1882  (fob  2789),  that  some  work  had 
been  done  on  sections  6 and  7,  and  the  work  being 
done  on  unit  prices  the  sums  then  due  the  con- 
tractors were  authorized  to  be  paid. 

On  May  1,  1882  (fob  2742),  Mr.  Adriance  re- 
ported that  he  had  so  paid  those  contractors  for 
the  6th  and  7th  sections.  Without  going  into  more 
details,  it  is  perfectly  apparent  on  reading  the 
excerpts  of  these  minutes,  particularly  the  rec- 
ords of  the  amounts  earned  by  the  different  con- 
tractors upon  their  sections,  and  the  audit  and 
])ayment  of  their  bills,  that  the  contractors  had 
actually  entered  ipmn  every  ))art  of  the  right  of 
way  extending  from  28rd  Street  to  the  Harlem 
Itiver  (we  are  concerned  only  with  that  ]iart  of 
the  road  from  45th  Street  to  the  Harlem  River), 
and  had  done  something  toward  the  construction 
of  the  same;  in  other  woi’ds,  were  in  full  oc(*u]ia- 
tiou  of  the  same. 


47 


It  appears  from  the  minutes  of  the  meeting  of 
November  8,  1833,  that  up  to  September  13,  1833 
(fob  2865),  the  company  had  expended  $241,693.93 
for  grading  Fourth  Avenue.  While  the  company 
tlius  from  the  outset  of  the  enterprise  entered  into 
full  possession  of  the  entire  strip,  the  railroad 
was  completed  only  in  sections.  It  appears,  for 
example,  that  on  November  9,  1832  (fob  2788), 
the  railroad  had  been  so  far  completed  that  a sin- 
gle track  had  been  laid  from  Prince  Street  to  14th 
Street,  and  the  Mayor  and  Common  Council  were, 
by  resolution  of  the  Board  at  a meeting  held  on 
that  day,  invited  to  ride  on  the  single  track  and 
dine  with  the  Directors.  Some  heavy  construction 
work  was  involved,  as  api)ears  from  the  minutes 
of  the  Board  of  December  24,  1832  (fob  2796), 
authorizing  a contract  to  drive  a tunnel  through 
the  hill  at  Yorkville  between  90th  and  95th  Streets. 
It  appears  that  by  ]\farch  29,  1833,  the  work  was 
so  far  advanced  that  sections  3 and  4 were  ready 
for  the  permanent  rails  (fob  2811).  At  the  meet- 
ing held  July  19th,  1833  (fob  2835),  the  contract 
for  the  erection  of  a station  house  at  Yorkville 
was  authorized.  The  rejiort  of  a committee  of  the 
Board  to  iiifpiire  into  and  ascertain  the  best  ])Iau 
of  ))roceeding  with  the  work  in  regard  to  the  En- 
gineering De])artment  was  rendered  at  the  meet- 
ing of  (^)ctober  11,  1833,  which  recites  (fob  2855)  : 

“In  as  much  as  the  whole  plan  of  the  work 
has  been  laid  out  & the  work  has  progressed 
on  that  plan  to  a very  great  extent  & mostly 
under  the  Su])erintendence  of  the  present  as- 
assistants,”  etc. 

It  api)ears  that  the  railroad  was  opened  for 
business  to  Yorkville  sometime  in  thf‘  year  1834, 
and  was  finally  coni})leted  to  the  llai'lem  River 
sometime  in  the  year  18;’, 7. 


48 


In  1834  tlie  Common  Council  was  memorialized 
by  various  ])arCes  to  whom  lands  had  been  sold 
or  leased  in  1790,  being  portions  of  the  Common 
Lands,  to  the  effect  that  the  City  map  of  1811  had 
laid  out  a system  of  streets  at  variance  with  the 
lines  of  the  old  Goerck  map,  and  praying  appro- 
priate relief  in  the  premises.  It  appears  that  the 
Common  Council  then  had  the  Common  Lands 
resurveyed  and  mapped  so  as  to  reflect  the  lines 
both  of  the  old  Goerck  map  and  of  the  City  map 
of  1811,  This  tract  of  land  was  accordingly  re- 
surveyed by  Isaac  T.  Ludlam  (See  Relator’s  Ex- 
hibit A,  p.  60,  fob  178,  reproduced  in  Appendix 
pp.  771-774). 

It  will  be  seen  from  an  inspection  of  this  map 
that  the  old  lot  lines  on  the  Goerck  map  did  not 
coincide  with  the  lines  of  Fourth  Avenue,  and 
that  there  was  an  overlapping  of  the  cross  streets 
upon  premises  which  the  City  had  conveyed  or 
leased.  Accordingly  the  old  conveyances  from 
the  City  were  rectified  and  the  holdings  of  the 
grantees  of  the  City  of  the  Common  Lands  were 
made  to  comply  with  the  lines  of  the  City  map 
filed  in  1811  (fols.  1259-1279,  pp.  420-427). 

This  circumstance  is  significant  of  the  fact  that 
it  was  the  determination  of  the  City  authorities 
that,  as  required  by  the  Legislature,  the  map  of 
1811  was  not  only  to  he  the  final  layout  of  the 
City,  but  that  old  streets  laid  out  on  the  former 
surveys  and  mai)s  were  to  he  regarded  as  discon- 
tinued and  obliterated  so  far  as  they  in  any  way 
conflicted  with  the  lines  of  the  City  maj). 

AVe  next  come  to  a significant  step  in  the  history 
of  this  railroad,  involving,  as  it  does,  a recog- 
nition of  the  permanent  occupation  by  the  railroad 
of  the  central  portion  of  Fourth  Avenue  as  laid 
down  on  the  city  map.  In  the  year  1835  a me- 
morial of  certain  property  owners  along  Fourth 


49 


Avenue  was  presented  to  the  Common  Council 
of  the  City  of  New  York,  alleging  the  desirability 
of  widening  Fourth  Avenue  to  the  width  of  140 
feet  upon  the  city  map  by  reason  of  the  oceu]ia- 
tion  of  the  middle  part  thereof  by  the  New  York 
and  Harlem  Railroad.  By  resolution  of  the  Com- 
mon Council,  api)roved  by  the  Mayor  February 
17,  1837,  it  was 

“Resolved,  That  the  map  or  plan  of  the 
city  be  altered  so  as  to  make  the  Fourth  Ave- 
nue 140  feet  wide  by  adding  20  feet  on  each 
side  of  the  same  from  34th  Street  to  the 
Harlem  River. 

Resolved,  That  the  counsel  of  the  Board 
take  the  necessary  measures  to  procure  a law 
of  the  Legislature  authorizing  such  altera- 
tion.” 

(See  Relator’s  Exhibit  U,  Appendix  p. 

780;  fols.  2338  to  2364). 

Pursuant  to  this  recpiest  the  Legislature,  by 
Chapter  274  of  the  Laws  of  1837,  duly  widened 
Fourth  Avenue  upon  the  city  ma]j  to  the  width  of 
140  feet,  as  specified  in  said  resolution  (fol.  180). 

In  Conaheer  vs.  The  New  York  Central  db  Hud- 
son River  Railroad  Company  (156  N.  Y.,  478)  tliis 
transaction  is  thus  desci’il)ed  in  the  statement  of 
the  ease : 

‘‘In  1835  the  matter  of  widening  Fouj-th 
Avenue  from  100  to  140  feet  was  brought  be- 
fore the  common  council  by  a petition  re- 
questing that  the  avenue  be  thus  widene  1. 
One,  if  not  the  chief,  ground  upon  which  this 
was  asked,  was  the  exist(‘'ice  of  the  railroad 
in  the  center  of  that  avenue.  Subs(‘r|UGMtly. 
and  in  1837,  the  street  was  widened  to  14') 
feet.” 


50 


We  have  already  shown  that  prior  to  1850,  by 
acts  of  the  Liegisiatiire  amending  the  charter  ot 
the  ISIew  i"ork  and  liarlem  Eailroad  Company,  tiu' 
latter  had  extended  its  line  northerly  across  the 
Harlem  Hiver,  and  into  and  through  the  counties 
of  Westchester,  Putnam,  Duchess  and  Columbia, 
and  i)ursuant  to  legislative  authority,  had  formed 
a connection  with  what  is  now  the  New  York,  New 
Haven  and  Hartford  Railroad  Company  whereby 
the  trains  of  that  company  were  operated  over 
the  New  York  and  Harlem  tracks  to  the  terminus 
of  tile  New  York  and  Harlem  Railroad  in  the  city 
of  New  Y"ork. 

We  have  then  an  ordinary  steam  railroad,  con- 
stucted  over  its  privately  owned  right  of  way 
between  New  York  and  Chatham,  the  southerly 
end  of  said  railroad,  at  least  to  the  south  line  of 
45th  Street,  being  constructed  over  a strip  of  land 
designated  as  the  site  of  a public  street,  but  uot 
yet  opened  or  used  as  such. 

For  nearly  20  years  it  had  been  assessed  and 
paid  taxes  as  the  owner  of  the  soil  and  entitled 
to  the  exclusive  use  of  its  railroad  right  of  way. 
To  sustain  the  Apjiellate  Division  this  Court  must 
say  that  Fourth  Avenue  througliout  its  length  was 
an  open  ])ublic  street  with  all  its  attriliutes  and 
that  as  regard  the  Harlem  CVnnpany  it  was 
wholly  unnecessary  for  the  city  to  take  any  iiro- 
ceediiigs  to  open  Fourth  Avenue. 

In  1850  the  city  took  the  proceeding  undei- 
Chapter  86  of  the  Laws  of  1813,  and  the  acts 
amendatory  thereof,  as  such  avenue  was  laid  out 
by  the  Commissioners  of  Streets  and  Roads  of  the 
City  of  New  York  under  Chapter  115  of  the  Laws 
of  1807,  and  as  later  widened  by  Chaiher  274  of 
the  Laws  of  1837.  We  say  that  the  gcuieral  act 
under  which  this  proceeding  was  taken  had  becoi 


51 


as  to  Fourtli  Aveuiie  further  amended  by  the 
charter  of  the  Xew  York  and  Harlem  f\ailroad 
Company,  Chapter  263  of  the  Laws  of  1831,  and 
the  acts  amendatory  thereof.  This  must  neces- 
sarily be  the  case,  because  the  Legislature  by  spe- 
cific act  passed  long  subsequent  to  the  general  act 
of  1813  devoted  Fourth  Avenue,  whether  opened 
or  unopened,  to  a public  use  inconsistent  with  the 
use  of  the  same  land  for  the  purposes  of  a public 
street.  The  City  had,  therefore,  no  power  under 
a senior  and  general  legislative  grant  or  authority 
to  take  and  destroy  property  by  subsequent  and 
express  legislation  devoted  to  another  pul)lic  use, 
namely,  that  of  a railroad.  The  city  could  only 
maintain  its  proceeding  in  such  qualified  way  as  to 
preserve  without  disturbance  the  railroad  public 
use.  If  the  railroad  use  could  not  be  })reserved 
without  affecting  the  street  use  then  the  latter 
was  bound  to  yield  to  the  former. 

Mills  on  Eminent  Domain,  Sec.  46  and 
cases  cited; 

Matter  of  the  City  of  Buffalo,  68  N.  Y., 
167; 

Matter  of  N.  Y.,  L.  E.  & W.  Kv.  Co., 
99X.  Y.,  12; 

Matter  of  Board  of  Street  Opening,  133 
N.  Y.,  .329; 

Matter  of  the  Mayor,  etc.,  of  Xew  York, 
135  N.  Y.,  253,  256; 

Matter  of  161st  Street,  52  ]\lisc.,  596; 
afiirmed  on  Opinion  at  Sj).  Term,  120 
N.  Y.  Sui,p.,  p.  839;  1.35  A.  I).,  912; 
affirmed  without  Opinion  198  X.  Y., 
606. 


A more  recent  application  of  the  rule  abo^e 
stated  is  found  in  X.  V.  Central  and  Hudson  IC'vrr 
It.  It.  Co.  vs.  at  a of  Ituffalo  (200  N.  V.,  1 1.’!), 


U.  OF  lU-  UB. 


52 


where  the  City  of  Buffalo  opened  Delevan  Avenue 
across  the  right  of  way  of  the  plaintiff’s  prede- 
cessor company,  thereby  under  the  City’s  charter 
acquiring  title  in  fee  to  the  lands  in  question.  The 
Court  held  that  the  railroad  use  was  not  destroyed 
but  was  preserved,  and  that  the  parcel  of  real 
estate  thus  acquired  for  street  purposes  was  held 
subject  to  the  senior  and  paramount  easement  in 
the  railroad  company  to  use  the  whole  of  such 
parcel  to  its  full  width  for  its  tracks,  notwith- 
standing there  was  but  a single  track  there  when 
the  proceeding  was  consummated. 

That  it  is  possible  for  two  public  uses  of  the 
same  property  to  be  preserved,  and  that  it  is  the 
duty  of  public  authorities,  wherever  physically 
possible,  to  preserve  two  public,  and  possibly  in- 
consistent, uses  of  the  same  laud  is  the  express 
holding  of  the  Court  of  Appeals  in  Suburban 
Rapid  Transit  Co.  vs.  The  Mayor  of  New  York 
(128  N.  Y.,  510). 

The  city  was  evidently  guided  by  the  legal 
principles  above  defined  in  the  jn'oceeding  to  open 
Fourth  Avenue  from  38th  Street  to  the  northerly 
side  of  135th  Street,  being  the  Harlem  River. 
The  proceeding  is  described  in  the  stipulation  en- 
tered into,  and  which  is  found  at  page  370,  folios 
1108-1117  of  the  record,  and  is  further  exhibited 
so  far  as  the  damage  map  is  concerned  upon  the 
Havilaud  map.  Relator’s  Exhibit  AAA  (A])]ien- 
dix,  p]).  058-972).  The  Commissioners  of  Es- 
timate and  Assessment  a])]')ointed  in  that  i)ro- 
ceeding  recognized  the  title  of  the  New  York  and 
Harlem  Railroad  Company  as  being  of  exactly 
the  same  quality  and  extending  throughout  the 
entire  stretch  from  tlie  southerly  Hue  of  45lh 
Street  to  the  Harlem  River,  notwithstanding  the 
fact  that  the  comjiany’s  title  rested  as  to  some 
])ortions  upon  the  ordinance  of  the  city  approved 


February  1,  1832,  as  to  other  portions  upon  deeds 
from  parties  who  had  parted  with  their  title  in 
the  bed  of  Fourth  Avenue  prior  to  the  giving  of 
the  deeds  to  the  railroad  company,  as  to  still 
other  portions  upon  no  paper  title,  and  finally  as 
to  the  remaining  portions  upon  absolutely  good 
and  indefeasible  muniments  of  title,  as  in  the  ease 
of  the  deed  from  Margaret  McGown,  and  the  title 
acquired  through  the  condemnation  of  the  lands 
of  the  infant  Sami^son  Adolphus  Benson. 

The  commissioners  in  thus  recognizing  the  title 
of  the  New  York  and  Harlem  Railroad  Company 
were  unquestionably  guided  by  the  established 
principle  of  law  that  20  years’  adverse  possession 
under  color  of  title  by  the  railroad  company  had 
cured  whatever  defects  might  have  originally 
existed  in  its  title,  inasmuch  as  the  continuous 
adverse  possession  for  the  statutory  period  of 
twenty  years  had  operated  in  law  to  transfer  the 
title  from  the  original  owners  to  the  New  York 
and  Harlem  Railroad  Company. 

Code  of  Civil  Procedure,  Sec.  369. 

Baker  vs.  Oakwood,  123  N.  Y.,  16. 

The  damage  map,  as  already  stated,  in  said 
proceeding,  is  noted  on  the  llaviland  map  (Aj)- 
pendix  (j)p.  958-972). 

It  appears  from  this  maj)  that  the  commis- 
sioners divided  the  roadl)ed  of  the  New  York  and 
Harlem  Railroad  into  parcels,  or  lots,  extending 
between  the  center  lines  of  each  of  the  cross 
street.  These  i)arcels  between  45th  Street  and 
the  Harlem  River  are  nund)ei-(!d  from  10t)7  to 
1097  inclusive,  and  for  each  of  these  parcels  the 
commissioners  awarded  the  sum  of  One  dollar, 
thus  indicating  that  tln-re  was  no  indication  on 
the  f)art  of  the  city  to  disturb  the  rights  enjoyed 


54 


by  the  New  York  and  Harlem  Railroad  Company 
in  this  strip  of  land. 

The  damage  map  is  significant  in  other  re- 
spects : From  45th  Street  to  84th  Street  the  New 
York  and  Harlem  Railroad  right  of  way  to  the 
extent  of  23  ont  of  24  feet  in  width  is  shown  on 
the  damage  map  as  being  located  within  the  limits 
of  the  so-called  East  Road.  The  damage  map, 
however,  indicates  as  the  “East  Road”  only  so 
nmch  thereof  as  lies  westerly  of  the  24-foot  strip, 
and  the  strip  between  the  railroad  bed  and  the 
original  easterly  line  of  Fourth  Avenue  is  marked 
“Corporation  of  New  York,”  between  a point 
about  60  feet  north  of  48th  Street  and  the  center 
line  of  84th  Street,  wherever  the  city  had  not 
already  deeded  portions  of  the  common  lands 
shaded  in  red  abutting  upon  the  easterly  line  of 
the  old  East  Road.  The  report  of  the  commis- 
sioners shows  that  substantial  awards  were  made 
to  the  private  owners  north  of  84th  Street,  for 
the  strips  of  land  on  each  side  of  the  New  York 
and  Harlem  right  of  way,  whereas,  but  the  nomi- 
nal award  of  One  dollar  is  made  to  the  railroad 
company  for  each  segment  of  its  right  of  way 
between  the  center  lines  of  cross  streets. 

We  have  then  in  this  proceeding,  which  was 
duly  confirmed  October  29,  1853,  an  adjudication 
that  the  New  York  and  Harlem  Railroad  Com- 
]iany  was  the  owner  of  this  entire  strip  of  land 
from  the  southerly  line  of  45th  Street  to  the  Har- 
lem River,  and  that  it  was  entitled  to  compensa- 
tion therefor,  but  that  such  compensation  was 
nominal  by  reason  of  the  absence  of  intention  to 
disturb  its  possession  of  the  street  for  railroad 
imrposes,  and  because  of  the  plain  intent  that  the 
street  was  to  be  used  as  a ])nblic  street  subject  to 
its  paramount  right  to  use  a ])ortion  of  the  same 
for  railroad  pur])oses.  Such  adjudication  is  final 


00 


and  cannot  be  attacked  in  a collateral  proceeding. 
See 

Conabeer  vs.  N.  Y.  Central  & H.  R.  R.  R. 
Co.,  84  Hun,  34,  39 ; 

Matter  of  Application  of  Dept,  of  Public 
Parks,  73  N.  Y.,  561; 

DePeyster  vs.  Mali  et  al.,  92  N.  Y.,  262; 
Dolan  vs.  The  Mayor,  62  N.  Y.,  472; 
Lewisobn  vs.  Lansing  Co.,  119  App.  Div., 
393; 

Matter  of  Belmont  Street,  128  App.  Div., 
636. 


In  Conabeer  vs.  N.  Y.  C.  d H.  R.  R.  Co.  (84 
Hun,  34),  alread)"  referred  to,  the  claim  of  the 
plaintiff-appellant  was  that  by  the  street  opening 
proceedings  consummated  in  1853  the  deed  from 
Mrs.  McGown  to  the  Railroad  Company  was  an- 
nulled. In  support  of  this  proposition  it  was 
asserted  that  the  city  could  not  acquire  tlie  fee 
of  the  street  subject  to  the  right  of  tlie  railroad 
company  to  use  a portion  of  it  for  its  purposes. 
Follett,  J.,  says,  page  39,  in  answer  to  this  con- 
tention : 

“Incumbrances  and  easements  burden 
many  estates,  the  title  to  which  is  held  in  fee, 
and  such  burdens  are  not  necessarily  incon- 
sistent with  a title  in  fee.  When  the  city 
acquired  the  title  to  this  avenue  the  New 
York  and  Harlem  Railroad  Company  was, 
and  for  more  than  twenty  years  had  been, 
occupying  the  central  portion  of  the  street, 
under  legislative  and  munici))al  authority,  for 
railroad  purposes,  and  had  erected  therein, 
pursuant  to  such  authority,  an  expensive  and 
valuable  structurCj  and  it  cannot  be  assumed, 
in  the  absence  of  proof,  that  for  an  award 
of  one  dollar,  the  city  intended  to  acquire,  or 


oo 


the  corporation  to  surrender,  its  title  to  the 
structure,  or  that  tlie  railroad  intended  to 
surrender  its  long-enjoyed  right  to  operate 
its  road  in  the  avenue.  The  practical  con- 
struction by  the  city  and  by  the  railroad  of 
the  effect  of  the  acquisition  of  the  title  to  this 
street  is  opi)osed  to  such  a contention.  The 
city  never  claimed  to  be  the  owner  of  the 
structure,  and  the  corporation  was  not  com- 
pelled to  remove  it,  nor  was  its  right  to  use 
it  abridged,  and  it  has  been  held  that  the 
structure  is  not  the  property  of  the  city  but 
of  the  railroad  (People  ex  rel.  The  N.  Y.  & 
H.  E.  R.  Co.  vs.  Comrs.  of  Taxes,  101  N.  Y., 
322).  By  Chapter  702,  Laws  of  1872,  the  title 
of  the  railroad  to  its  structure  in  the  avenue 
and  the  right  to  continue  to  operate  its  road 
therein  are  expressly  recognized.” 

In  Matter  of  Application  of  Department  of  Pub- 
lic Parks  (supra),  the  Court  of  Appeals  said: 

“The  award  of  the  commissioners  of  esti- 
mate and  assessment  is  required  by  the 
statutes  to  be  confirmed  by  the  Supreme 
Court,  and  when  so  confirmed  is  made  final 
and  conclusive,  both  upon  the  city  and  the 
owners  of  the  land  taken.  (Laws  of  1813, 
chap.  8bj  113 ; Laws  of  1865,  chap.  565 ; Laws 
of  1862,  chajD.  483.)  Under  the  statute  of  1813 
there  is  ample  opportunity  for  the  correction 
of  all  mistakes  of  law  and  fact,  and  unless 
they  are  corrected  in  the  proceedings  before 
confirmation,  all  i)arties  interested  are  pre- 
cluded from  comi)laining  of  them.  The  award 
after  confirmation  becomes  in  the  nature  of  a 
judginent  which  cannot  be  assailed  collater- 
ally. It  is  as  final  and  conclusive  u})on  all 
imrties  as  a judgment.  (Matter  of  Commis- 
sioners Central  Park,  50  N.  Y.,  493;  In  re 


0/ 


Arnold,  60  id.,  26;  Dolan  vs.  The  Mayor,  62 
id.,  472;  Pittman  vs.  The  Mavorj  62  N.  Y., 
637). 

In  De  Peyster  vs.  Mali,  et  al.,  92  N.  Y.,  262,  the 
Court  said : 

“By  section  178  of  chapter  86  of  the  Laws 
of  1813,  it  is  provided  that  the  award  of  the 
commissioners  of  estimates  and  assessments, 
when  confirmed,  ‘shall  be  final  and  conclusive 
as  well  upon  the  said  mayor,  aldermen  and 
commonalty  of  the  city  of  New  York  as  upon 
the  owners,  lessees,  persons  and  parties  in- 
terested in  and  entitled  unto  the  lands,  tene- 
ments, hereditaments  and  premises  men- 
tioned in  the  said  report,  and  also  upon  all 
other  persons  whomsoever.’  Under  this  pro- 
vision, while  these  awards  were  undoubtedly 
excessive  they  were  final  and  conclusive,  and 
this  is  so  even  if  we  must  assume  that  they 
should  have  been  but  for  nominal  damages, 
and  that  the  commissioners  and  the  Supreme 
Court,  when  it  confirmed  the  report  mistook 
both  the  law  and  the  facts  applicable  to  the 
case,  and  so  it  has  freriuently  been  decided. 
(Matter  of  Commissioners  of  Central  Park, 
50  N.  Y.,  493 ; Dolan  vs.  The  Mayor,  62  id., 
472;  ^fatter  of  De])artment  of  Parks,  73  id., 
560).’’ 


It  appears  that  over  certain  portions  of  its 
right  of  way,  namely,  over  the  deiu-ession  from 
a point  south  of  the  old  Harlem  Pond  to  a i)oint 
near  115th  Street  the  railroad  was  originally  con- 
structed u])on  a high  viaduct  or  fill  so  that  by  no 
l)0ssibility  could  the  i)ublic  physically  us(‘  that 
portion  of  the  street  occupied  for  railrf)ad  pur- 
poses. This  was  the  situation  opposite  the  (’ona- 
bcer  premises  at  the  coriicr  of  104th  Sli'cct,  which 


58 


part  of  the  right  of  way  was  conveyed  to  the 
railroad  company  by  Margaret  McGown.  One 
of  the  contentious  of  the  plaintitf  in  the  Conaheer 
case  which  was  overruled  by  all  the  courts  was 
that  the  effect  of  the  street  opening  proceedings 
consummated  in  1853,  was  to  acquire  whatever 
title  the  railroad  company  secured  from  Mrs. 
McGown,  destroying  the  effect  of  her  deed  and 
giving  her  successor  in  title,  Mrs.  Conaheer,  a 
cause  of  action  for  the  invasion  of  easements  of 
light,  air  and  access,  by  reason  of  the  mainte- 
nance and  operation  of  trains  upon  this  stone 
viaduct  structure.  The  original  viaduct  structure 
supported  two  tracks  and  was  26  feet  in  width, 
and  the  viaduct  structure  erected  under  Chapter 
702  of  the  Laws  of  1872  was  some  56  feet  in  width. 
Discussing  the  effect  of  the  street  opening  pro- 
ceedings, Martin,  J.,  says  (Conaheer  vs.  N.  Y.  C. 
& H.  R.  R.  R.  Co.,  156  N.  Y.,  474)  at  page  485 : 

“Although,  under  the  statute  of  1807,  the 
commissioners  appointed  made  a map  which 
included  Fourth  Avenue,  still,  until  the  street 
was  opened  and  the  damages  to  the  owners  of 
the  land  paid,  the  title  remained  in  the 
latter.” 

Page  486: 

“When  this  street  was  opened  the  munici- 
pality assumed  to  acquire  the  title  of  the  New 
York  and  Harlem  Railroad  Company  to  the 
property  which  it  owned  in  Fourth  Avenue, 
awarding  it  therefor  the  nominal  sum  of  one 
dollar  upon  each  lot.  At  that  time,  however, 
the  municipal  authorities  and  the  legislature 
recognized  the  right  of  the  railroad  company 
to  continue  its  road  in  the  street  and  in  no 
way  disturbed  its  possession  or  the  exercise 
of  that  right.  It  is  claimed  that  by  this  pro- 


59 


eeeding  the  city  became  vested  with  the  title 
to  the  property  of  the  railroad  company,  and, 
hence,  that  the  deed  from  Mrs.  McGown  to 
the  Xew  York  and  Harlem  Railroad  Company 
was  abrogated  and  its  effect  wholly  annulled. 
This  contention  cannot  be  maintained.  If  it 
be  admitted  that  the  naked  title  to  the  land 
passed  to  the  city,  it  is  still  clear  that  the 
consent  of  Mrs.  McGown  to  the  construction 
and  operation  of  this  road  did  not  pass  with 
it.  That  grant  was  at  least  an  irrevocable 
consent  to  the  use  of  the  land  for  a specific 
purpose,  which  continued  and  remained  in  the 
corporation  to  which  it  was  made.  But  if,  as 
claimed,  it  passed  to  the  city,  so  that  the  city 
had  the  right  formerly  possessed  by  the  rail- 
road company,  then  it  is  equally  clear  that 
the  right  still  exists,  and  as  the  city  has  con- 
sented to  the  use  of  the  street,  Mrs.  McGown 
and  her  subsequent  grantee  are  yet  bound 
by  that  grant.  When  the  street  was  opened, 
in  1853,  the  railroad  was  upon  a high  viaduct 
along  the  center  of  the  avenue  which  was  in 
the  sole  and  exclusive  possession  of  the  rail- 
road, and  no  portion  of  it  was  occupied  as  a 
public  street.” 

Page  490: 

“Under  the  circumstances  of  this  case,  it 
is  manifest  that  * * * the  only  streets  for 
public  use  which  existed  in  Fourth  Avcime 
• • * were  streets  forty-two  feet  in  width 
upon  each  side  of  the  viaduct  occupied  by  the 
defendants.”  (Italics  ours.) 

It  is  evident  that  the  Court  considered  that  as 
the  charter  of  the  New  York  aiul  Harlem  Rail- 
road Company  was  subject  to  modification  and 
amendment  by  the  Legislature,  the  street  was 


60 


opened  subject  to  all  the  rights  whether  then 
actually  exercised  or  potential,  and  liable  to  be 
thereafter  exercised  under  legislative  authority 
by  the  New  York  and  Harlem  Railroad  Company. 

It  vdll  be  seen  that  the  primary  purpose  and 
the  main  accomplishment  of  Chapter  702  of  the 
Laws  of  1872  was  to  abolish  existing  grade  cross- 
ings and  the  occupation  of  the  surface  of  Fourth 
Avenue  bj"  railroad  tracks,  so  that  street  uses 
and  railroad  uses  would  be  wholly  separated.  The 
railroad  companies  were  required  to  spend  (for 
those  times)  a vast  sum  of  money  to  accomplish 
this  result,  and  one  of  the  compensations  for  such 
exi)enditure  was  the  grant  by  the  Legislature  of 
the  right  to  lay  two  additional  tracks  upon  the 
railroad  structures  prescribed  by  the  Legislature. 

To  some  extent  this  involved  the  destruction 
of  the  street  use  and  the  devotion  of  the  land 
involved  to  purely  railroad  uses.  No  constitu- 
tional conditions  as  to  local  consents  rested  upon 
the  Legislature  in  making  such  change  in  the 
status  of  Fourth  Avenue  at  the  time,  and  it  was 
competent  for  it  to  carve  out  of  the  land  com- 
prising the  strip  of  real  estate  140  feet  in  width 
and  known  as  Fourth  Avenue  a permanent  ease- 
ment to  lay  and  maintain  two  additional  tracks, 
and  convey  such  easement  to  the  railroad  com- 
panies. This  we  submit  was  the  legal  effect  of 
the  transaction.  When,  therefore,  pursuant  to 
the  reserved  power  to  alter  and  amend,  the  Legis- 
lature by  Chai)ter  702  of  the  Laws  of  1872,  author- 
ized and  required  a different  and  wider  railroad 
occupation  of  Fourth  Avenue,  it  conferred  no 
new  or  inde])endent  franchise,  it  simply  modified 
the  right  conferred  in  1831,  which  was  a general 
and  not  a s])ecial  franchise  within  the  definition 
of  the  tax  law. 


61 


A special  francliise,  subject  to  taxation  witliiii 
the  definition  of  Chapter  71*2  of  the  Laws  of  1899, 
is  restricted  to 

“all  franchises,  rights  or  permission  to  con- 
struct, maintain  and  operate  surface,  under- 
ground or  elevated  railroads  in,  under,  above, 
on  or  through  streets,  highways  or  public 
places,” 

and  a special  franchise  under  the  act  shall  be 
deemed  to  include  the 

“value  of  the  tangible  property  of  a person, 
co-partnership,  association  or  corporation 
situated  in,  on,  under  or  above  any  street, 
highway  or  public  place,  or  public  waters,  in 
connection  with  the  special  franchise.” 

The  definition  assumes  that  the  strip  of  land  as 
to  which  a special  franchise  is  asserted  must  be  at 
the  time  the  franchise  is  created,  some  existing, 
duly  constituted  street,  highway  or  public  place. 

In  People  ex  rel.  Metropolitan  Street  Railway 
Company  vs.  Tax  Commissioners  (174  N.  Y.,  417), 
the  distinction  between  the  general  franchise  of  a 
corporation  and  the  special  franchise  subject  to 
taxation,  is  thus  described  by  Vann,  J.,  at  page 
4.35 : 


“The  general  franchise  of  a corporation  is 
its  right  to  live  and  do  business  by  the  exer- 
cise of  the  corporate  powers  granted  l)y  the 
state.  The  general  franchise  of  a street  rail- 
road company,  for  instance,  is  tin*  s])ecial 
privilege  conferred  by  the  state  upon  a cer- 
tain number  of  persons  known  as  the  cori)ora- 
tors  to  become  a street  railroad  cor])oration 
and  to  construct  and  operate  a street  railroad 
under  certain  conditions.  Such  a franchise, 
however,  gives  the  corporation  no  right  to  do 
anything  in  the  public  highways  without 


62 


special  autlioiity  from  the  state,  or  some 
municipal  officer  or  body  acting  under  its 
authority.  When  a right  of  way  over  a public 
street  is  granted  to  such  a corporation,  with 
lease  to  construct  and  operate  a street  rail- 
road thereon,  the  privilege  is  knovm  as  a spe- 
cial franchise,  or  the  right  to  do  something  in 
the  public  highway,  which,  except  for  the 
grant,  would  be  a trespass.” 

Applying  this  definition  to  the  facts  before  the 
C^ourt,  the  New  York  and  Harlem  Railroad  Com- 
])any  received  from  the  State  a general  franchise 
to  exercise  the  power  of  a railroad  corporation  in 
its  organization,  the  location  of  its  line,  the  ac- 
quirement of  its  right  of  way  by  purchase  or  con- 
demnation, and  the  right  to  exact  tolls  from  the 
Xmblic  for  the  use  of  the  transportation  facilities. 
No  special  franchise  was  conferred,  except  as  to 
that  portion  of  Fourth  Avenue  which  had  at  the 
time  become  a public  street,  namely,  below  38th 
Street,  a portion  of  Fourth  Avenue  with  which  the 
present  case  is  not  concerned. 

In  Lord  vs.  Equitable  Life  Asenrance  Society 
(194  N.  Y.,  212),  the  above  quotation  from  the 
Metropolitan  Street  Railway  case  is  set  forth  in 
the  opinion  of  Vann,  J.,  with  aiqiroval,  prefaced 
with  the  following  statement,  p.  225: 

“The  charter  of  a corporation  is  the  law 
which  gives  it  existence  as  such;  that  is,  its 
gcmeral  franchise,  which  can  be  re]iealed  at 
the  will  of  the  Legislature.  A special  fran- 
chise is  the  right  granted  by  the  public  to  use 
l)ublic  i)roperty  for  a ])ublic  use,  but  with 
private  profit,  such  as  the  right  to  build  and 
operate  a railroad  in  the  streets  of  the  city. 
Such  a franchise  when  acted  u])on  becomes 
property  and  cannot  be  repealed  unless  ])ow(‘r 
to  do  so  is  reserved  in  the  grant,  although  it 


G3 


may  be  condemned  upon  making . compensa- 
tion.” 

Can  it  be  seriously  asserted  that  Fourth  Ave- 
nue above  -l-5th  Street  was  “public  property”  in 
1831  ? 

A case  now  pending  in  the  courts,  which  we 
submit  is  not  distinguishable  in  its  legal  aspects 
from  the  case  at  bar,  is  People  ex  rel.  Long  Island 
Railroad  Company  v.  State  Board  of  Tax  Com- 
missioners, Appellate  Division,  Second  Depart- 
ment, reported  in  133  N.  Y.  Supp.,  348;  * * * 
App.  Div.  * * * * 

The  Brooklyn  & Jamaica  Railroad  Cominiiiy 
was,  like  the  New  York  & Harlem  Rail- 
road, organized  under  a special  act  of  the 
Legislature,  Chapter  256,  Laws  of  1832,  for 
tlie  i)urpose  of  building  a railroad  between 
Brooklyn  and  Jamaica.  There  was  a provision. 
Section  28,  similar  to  that  in  the  charter  of  the 
New  York  & Harlem  Railroad  Company,  requir- 
ing that  no  street  or  highway  in  Brooklyn  should 
be  made  use  of  by  said  liailroad  Conqiany  for  its 
railroad  without  the  permission  of  Brooklyn  first 
liaving  been  obtained.  The  Long  Island  Railroad 
Company,  organized  by  si)ecial  act,  C’hapter  178 
of  the  Tjaws  of  1834,  subsecpiently  leased  the  rail- 
road of  the  Brooklyn  & Jamaica  Railroad  Com- 
pany and  the  right  of  way  of  the  railroad  was 
acquired  by  purchase  or  condemnalion  exactly  as 
was  that  of  the  New  York  & Harlem  Railroad 
Company  and  the  railroad  l)uilt.  Subsequently  a 
new  street,  Atlantic  Avenue,  was  laid  out  so  as  to 
include  within  its  limits  in  part  the  right  of  way 
of  the  railroad  of  the  Brooklyn  k Jamaica  Com- 
pany and  an  agreement  was  entered  into  in  1855, 
sanctioned  by  an  act  of  liegislature  of  that  year, 
(’hapter  475,  whereby  the  Bailroad  Conqiany  was 


64 


to  surrender  its  roadbed  and  change  its  location 
so  as  to  occupy  the  central  thirty-foot  strip  of  the 
projected  avenue. 

The  proceeding  was  commenced  to  open  Atlan- 
tic Avenue  in  the  latter  part  of  1855  and  consum- 
mated by  final  order  in  1860.  In  this  proceeding 
it  was  subsequently  held  that  the  City  of  Brooklyn 
acquired  the  absolute  fee  of  the  land  within  the 
limits  of  Atlantic  Avenue  as  laid  out,  and  that  the 
Railroad  Company  acquire  only  a right  in  the 
nature  of  an  easement  to  occupy  the  central 
thirty-foot  strip  with  a two  track  railroad  on  one 
grade.  It  will  be  observed  that  the  street  was 
entirely  opened  before  the  railroad  entered  into 
it  and  that  in  effect  it  secured,  by  virtue  of  the 
agreement  with  the  City  and  the  Act  of  the  Legis- 
lature, the  right  to  occupy  the  central  portion  of 
the  public  street  then  open  for  its  railroad.  It 
will  be  observed  how  much  stronger,  in  this  re- 
spect, the  Atlantic  Avenue  case  is  in  support  of 
the  proposition  that  the  railroad  occupied  what 
the  Tax  Law  subsequently  defined  as  a “special 
franchise.”  In  1897  the  Legislature  passed  an 
Act,  Chapter  499,  requiring  the  improvement  of 
Atlantic  Avenue  in  a fashion  quite  similar  to  the 
improvement  acts  in  Park  Avenue,  the  Act  being 
apparently  modeled  both  upon  Chaiffer  702  of 
the  Laws  of  1872  and  Chai)ter  3.49  of  the  Laws 
of  1892,  being  the  Park  Avenne  Improvement 
Acts.  The  status  of  the  City  and  of  the  Railroad 
Com])any,  with  reference  to  this  central  tliirty- 
foot  strip,  was  determined  l)y  this  Court  iu  Matter 
of  Long  Island  Railroad  Co.,  189  N.  Y.,  428;  iii 
Leffmann  v.  Long  Island  Railroad  Compang,  120 
App.  Div.,  528,  affirmed  187  N.  Y.,  518;  aud  also 
in  Long  Island  Railroad  Compang  v.  Citg  of  Xeir 
York,  199  N.  Y.,  288. 


65 


This  Court  held  that  the  Railroad  Company 
had  only  an  easement  and  that  after  the  grade  of 
its  railroad  was  changed  i:)ursuant  to  the  Improve- 
ment Act  so  as  to  make  the  railroad  go  above  and 
under  ground,  it  had  no  right  to  use  the  surface 
of  the  central  portion  of  Atlantic  Avenue  for  an 
additional  trolley  line. 

If  there  is  any  virtue  in  the  doctrine  of  estoppel 
as  applied  to  a railroad  company  in  occupying  a 
paper  street,  there  would  seem  to  he  all  the  more 
ground  in  claiming  an  estoppel  preventing  it  from 
maintaining  that  an  opened  and  publicly  used 
street  was  not  such  on  the  question  of  whether  its 
occupation  did  or  did  not  constitute  a special  fran- 
chise. The  courts,  however,  in  the  Atlantic  Ave- 
nue case  have  thus  far  unanimously  held  that  the 
railroad  occupation  of  Atlantic  Avenue  is  not  a 
special  franchise  and  that  the  State  Board  had  no 
power,  authority  or  jurisdiction  to  assess  the 
same  as  a special  franchise.  When  this  case  was 
before  the  Special  Tenn,  Mr.  Justice  iMarean  said 
(see  New  York  Law  Journal,  December  14,  1910) : 

“The  only  difference  I can  discover  be- 
tween the  Long  Island  Railroad’s  interest  in 
the  thirty-foot  strip  and  the  interest  which 
railroads  obtain  upon  condemnation  of  a right 
of  way  by  ordinary  methods,  is  that  the  re- 
verter here  will  he  to  the  city  for  street  uses 
generally  in  case  of  abandonment  while  in 
the  other  cases  it  is  to  the  owner  at  the  time 
of  condemnation  * * *.  I do  not  think 

the  case  is  within  the  spirit  and  ])urpose  of 
the  special  ?''ranchise  Tax  Law.  I think  the 
strip  should  be  assessed  to  the  railroad  locally 
as  other  land  is  assessed,  and  that  the  assess- 
ment laid  by  the  State  Board  should  be  va- 
cated. Judgment  accordingly.’’ 


66 


In  the  unanimous  affirmance  of  this  decision, 
the  Appellate  Division,  Second  Department,  Mr, 
Justice  Burr  writing,  says  (183  N.  Y.  Supp.,  350)  : 

“We  think  that  the  right  which  relator  has 
to  construct,  maintain,  or  operate  its  road  on 
said  strip  of  land  is  not  such  a right  as  was 
contemplated  by  the  amendment  to  the  tax 
law,  providing  for  the  taxation  of  a special 
franchise  (Laws  of  1899,  Chap.  712).  The 
object  of  this  amendment  was  to  reach 
and  subject  to  taxation  ‘property  scattered  all 
over  the  state  worth  nearly  $200,000,000, 
which  was  not  taxed  at  all  and  had  never 
been  taxed.’  People  ex  rel.  Met.  St.  Ry.  Co. 
v.  Tax  Commissioners,  174  N.  Y.,  417,  on  page 
437. 

“In  People  ex  rel.  Hudson  S Manhattan 
Railroad  Co.  v.  State  Hoard  of  Tax  Commis- 
sioners, 203  N.  Y.,  119,  the  Court  says: 

‘The  right  to  enter  the  streets  is  under  the 
statute  unquestionably  a special  franchise.’ 

“But  this  language  must  be  construed  with 
reference  to  the  facts  existing  in  the  cases 
then  under  consideration.  We  think  that  it 
should  be  limited  to  a case  where  the  privi- 
lege to  occupy  the  street  or  highway  results 
solely  from  permission  by  the  proper  author- 
ities, and  where  the  railroad  company  has  no 
estate  or  interest  in  the  land  itself  over  which 
it  is  operating  its  road.  There  may  he  a 
‘right  of  way’  owned  by  a railroad  corpora- 
tion and  by  reason  thereof  it  may  be  author- 
ized to  construct  and  operate  a railroad  over 
land  which  subsequently  becomes  a public 
street,  which  right  will  not  necessarily  be  a 
special  franchise  within  the  meaning  of  the 
tax  law.  A railroad  company  may  i)ossibly 
occupy  land  which  is  within  the  boundaries 
of  an  existing  public  street,  and  do  so  by 


67 


virtue  of  a right  therein  iudepeudeut  of  mere 
permission  to  use  the  street.  In  such  case  it 
may  not  be  liable  to  be  assessed  as  for  a spe- 
cial franchise.  As  was  said  in  People  ex  rel. 
Met.  St.  By.  Co.  v.  Tax  Com’rs,  supra; 

‘The  statute  should  be  considered  in  the 
light  of  the  circumstances  existing  when  it 
was  passed,  which  were  extraordinary  and 
unprecedented.  ’ 

“When  a railroad  is  maintaining  and  oper- 
ating its  road  upon  its  own  right  of  way,  and 
what  is  done  therein  is  done  by  virtue  of  the 
ownership  of  the  soil  or  of  some  interest 
therein,  even  although  this  right  of  way  may 
be  included  ^\'ithin  parallel  lines  upon  either 
side  thereof,  constituting  the  boundaries  of  a 
street  or  highway,  this  right  is  not  a special 
franchise,  subject  to  taxation.  This  seems 
to  be  clearly  within  the  principle  established 
in  People  ex  rel.  Hudson  & Manhattan  Co.  v. 
Tax  Com’rs,  suj^ra,  and  People  ex  rel.  N.  T. 
C.  R.  R.  Co.  V.  Woodbury,  203  N.  Y.,  167,  96 
N.  E.,  431.  In  the  latter  case  it  was  said: 

‘A  street  crossing  franchise  consists  of  the 
right  to  lay  tracks  across  a street  and  use 
them,  when  but  for  a grant  of  the  right  to  do 
so  from  competent  i)ublic  authority  it  would 
be  a tresi)ass. ’ Hut  ‘if,  after  they  have  tlieii- 
rights  of  way  secured  over  private  land,  a 
public  highway  is  laid  across  the  tracks,  wliih* 
there  is  a crossing  it  is  not  a crossing  made 
by  the  railroad  or  through  ])ublic  favor  so 
far  as  the  railroad  is  concerned.’  ” 

“If  it  possesses  its  right  of  way  by  ])ur- 
chase  or  as  matter  of  right,  it  does  not  hold 
it  as  a matter  of  ‘public  favor.’  It  may  be 
an  anomalous  situation  that  a railroad  cor- 
7)oration  should  hold  a private  aiid  exclusive 
right*of  way  through  a public  llioroughfare, 
but  the  situation  with  regard  to  At  laid  ic  A\-e- 


68 


nue  and  the  improvement  thereof  is  an  anom- 
alous one,  and  must  be  dealt  with  accordingly. 
It  is  doubtful  if  it  had  a parallel  anywhere 
within  the  state.  Prior  to  1855  we  find  re- 
lator or  its  predecessors  in  interest  owning 
a private  right  of  way  to  the  north  of  the 
then  existing  line  of  a j^rojected  street  as  laid 
down  on  the  map,  but  not  actually  opened. 
We  find  it  entering  into  an  agreement  with 
the  city  of  Brooklyn,  by  means  of  which,  in 
order  to  enable  the  latter  to  construct  ‘a  noble 
avenue  120  feet  wide’  {Matter  of  Long  Island 
R.  R.  Co.,  supra),  it  ceded  to  the  city  the  land 
which  it  owned  in  fee,  receiving  as  a consid- 
eration therefor  ‘forever  * * * the  ex- 

clusive right  to  use  and  occupy  a strip  or 
space  of  the  width  of  thirty  feet’  in  the  center 
of  said  avenue  as  widened  and  extended.  The 
avenue  from  the  very  moment  of  its  construc- 
tion was  ‘subject  to  an  easement  for  railroad 
purposes  over  the  central  portion.’  Matter 
of  Long  Island  R.  R.  Co.,  supra.  Relator’s 
right  to  the  use  of  this  portion  of  the  street 
was  not  by  public  favor,  but  because  of  its 
ownership  of  an  easement  therein,  acquired 
for  a valuable  consideration,  pursuant  to  con- 
tract and  legislative  act,  contemporaneously 
with  the  construction  of  the  street  itself,  and 
as  a part  of  the  general  scheme  therefor.  It 
was  a right  founded  upon  an  interest  in  the 
land  itself.  If  this  is  not  the  case  of  a street 
coming  to  a railroad,  as  in  People  ex  rel.  N. 
Y.  C.  R.  R.  Co.  V.  Woodbury,  supra,  neither 
is  it  the  case  of  a railroad  coming  to  an  ex- 
isting street.  Both  the  street  and  the  railroad 
easement  came  into  existence  together.  No 
additional  right  was  conferred  upon  the  rail- 
road by  the  construction  of  the  street.  On 
the  contrary,  in  connection  with  i5uch  con- 
struction it  acquired  a right  of  way  therein 


C9 


only  by  way  of  easement,  while  surrendering 
and  ceding  a right  of  way  in  fee.  Nor  is  this 
a case  where  relator  is  seeking  to  evade  its 
just  liability  to  taxation.  Previous  to  the 
passage  of  the  special  franchise  amendment, 
for  a long  period  of  years  it  had  been  taxed 
upon  its  property  rights  in  this  strip  and  had 
discharged  its  obligations  in  connection 
therewith. 

“We  deem  the  action  of  the  State  Board  of 
Tax  Commissioners  erroneous,  and  the  order 
vacating  and  setting  aside  the  assessment  of 
the  relator  as  for  a special  franchise  should 
be  affirmed,  with  $10  costs  and  disbursements. 
All  concur.” 

We  are  informed  that  an  appeal  was  taken  from 
this  decision  of  the  Second  Appellate  Division  to 
this  Court  and  is  now  pending  and  probably  will 
be  argued  at  or  about  the  same  time  as  the  present 
appeal.  The  opinion  of  the  learned  Ai)pellate 
Division,  Third  Department,  in  the  case  at  bar  is 
so  exactly  opposed  to  the  reasoning  and  decision 
of  the  Second  A])pellate  Division  that  we  do  not 
see  how  the  two  divergent  theories  of  decision  can 
both  survive  the  review  of  this  Court.  In  tlu* 
Atlantic  Avenue  case  the  Kailroad  Company  re- 
linquished its  private  right  of  way,  including  the 
partial  occiq)ation  or  intersection  of  public  streets 
in  J>rooklyn,  to  occuiw  a portion  of  the  public 
highway  previoush/  laid  out  and  o])ened.  In  the 
case  at  bar  the  New  York  & llailem  Railroad 
Company  acr|nired  its  private  right  of  way  along 
the  center  of  a projected  unopened  sti'eet,  and 
suhsequenlbf,  twenty  years  after  its  original  occn- 
ftation,  its  title  was  acquired  by  the  City  in  a strecd 
opening  j)roceedin'r. 

In  /Vop/c  CT  rrl.  Xf'w  York  CcnfraJ  cf  lltidson 
liivpr  Ihiilroofl  C'owjxini),  v.  Wondburif,  ‘JO.'l 


N.  Y.,  167,  two  questions  were  decided  by  tliis 
Court:  First,  that  the  special  franchise  pro- 
\isions  of  the  Tax  Law  do  apply  to  steam  rail- 
road occupations  of  pre-existing  highways;  and 
second,  that  wdien  a highway  is  opened  and  con- 
structed across  or  along  an  existing  railroad,  the 
railroad  may  not  be  taxed  as  for  a special  fran- 
chise. In  that  case  we  understand  that  when  the 
original  railroads  of  the  predecessor  companies 
of  the  relator  were  built  in  the  City  of  Buffalo 
they  crossed  or  occupied  numerous  streets  laid 
out  on  filed  maps  which,  at  the  time,  had  not  been 
opened  or  used  as  public  highways,  but  whicli 
were  subsequently  opened  and  used.  ■ That  situa- 
tion, we  submit,  was  quite  as  susceptible  to  the 
contention  that  the  railroad  was  built  with  notice 
of  the  inchoate  streets  and  that  the  railroad  com- 
pany was  estopped  from  asserting  that  they  were 
not  public  streets  for  the  purpose  of  complying 
with  the  definitions  in  the  Tax  Law  as  to  special 
franchises.  Very  much  the  same  argument  was 
made  by  the  respondent  in  that  case  to  sustain  the 
jurisdiction  of  the  State  Board  of  Tax  Commis- 
sioners as  has  been  made  by  the  learned  A]qiellate 
Division  in  this  case. 

This  Court,  in  Albany  Northern  R.  R.  Co.  v. 
Broivnell,  24  N.  Y.,  .345,  speaking  by  Chief  Judge 
Denio,  sustained  the  constitutionality  of  a statute 
which  authorized  the  laying  out  of  a subsequent 
highway  across  an  existing  railroad  without  com- 
j^ensation  to  the  latter.  In  commenting  on  this 
decision  the  Conrt  says  iier  Vann,  J.: 

“The  actual  decision  was  that  chapter  62 
of  the  Laws  of  185.3,  now  repealed  but  re- 
enacted with  some  safeguards  by  the  Grade 
Crossing  Act;  in  authorizing  the  construc- 
tion of  highways  across  railroad  tracks  with- 
out compensation,  does  not  violate  the  con- 


71 


stitutional  provision  against  taking  private 
property  for  public  use  or  impair  the  obliga- 
tion of  contracts.  This  is  far  from  holding 
that  the  charter  of  a railroad  company  in- 
volves the  grant  of  a franchise  hy  anticipa- 
tion whenever  a new  street  is  laid  out  across 
its  tracks.  'When  the  relator  or  its  predeces- 
sor acquired  its  right  of  way,  whether  in  fee 
or  not  is  unimportant,  it  had  the  right  to  use 
it  without  the  grant  of  any  further  privilege 
from  the  State.  It  was  its  own  property, 
acquired  by  the  condemnation  or  purchase  of 
land  or  an  interest  therein  from  private 
owners,  with  no  grant  from  the  State.  Years 
afterward,  when  a highway  was  extended  over 
its  right  of  way,  no  grant  was  made  to  it  of  a 
franchise  or  anything  else,  but  something  was 
taken  away  from  it  without  comi)ensation, 
which  could  be  justified  only  upon  the  ground 
that  Judge  Denio  placed  it.  In  other  states 
compensation  has  been  held  under  such  cir- 
cumstances essential  to  the  validity  of  the 
statute.  {Illinois  Central  R.  R.  Co.  v.  City  of 
Rloomington,  7G  III.,  447 ; Chicago  S Grand 
Trunk  R.  Co.  v.  Hough,  61  Mich.,  507;  Old 
Colony  & Fall  River  R.  R.  Co.  v.  County  of 
Plymouth,  14  Gray,  155.)  As  the  relator 
owned  its  right  of  way  it  had  all  it  could  get 
and  all  that  it  needed.  No  grant  of  a special 
franchise  was  necessary,  and  never  became 
necessary,  for  it  built  its  road  on  its  own 
private  right  of  way.  It  did  not  cross  an  ex- 
isting street,  but  a new  street  came  to  it  and 
crossed  its  tracks,  thereby  adding  a burden 
but  conferring  no  benefit.  Instead  of  the 
railroad  having  an  easejnent  to  ci’oss  the 
street  the  street  has  an  ♦•asernent  to  cross  the 
railroad.  (N.  Y.  C.  <£  II.  R.  R.  R.  Co.  v.  City 
of  Rn ffalo,  200  N.  V.,  1 1 d,  110.) 

“The  relator  acce])ted  its  charter  to  be  a 


railroad  corporation,  and  the  charter  was 
subject  to  amendment  under  the  power  re- 
served by  the  legislature  and  hence  was  sub- 
ject to  the  prospective  burden  of  streets  being 
extended  across  the  tracks;  still  the  statute 
subsequently  imposing  that  burden  did  not 
make  a grant  or  create  a special  franchise. 
In  other  words,  the  general  franchise  or  char- 
ter of  the  relator  or  its  predecessor  author- 
ized the  construction  of  a railroad  from  the 
city  of  Buffalo  to  some  other  terminal  point. 
Afterward,  the  fee  of  the  land  necessary  to 
construct  the  road,  or  a right  of  way  over  the 
same,  was  acquired  and  after  the  railroad 
had  been  in  operation  for  years  the  street 
came  along  and  crossed  it,  but  the  right  of  the 
railroad  to  keep  its  tracks  where  they  were 
continued  the  same  as  before.  It  remained 
in  possession  by  virtue  of  its  original  prop- 
erty right  only.  When  the  legislature  under 
its  reserved  power  so  amended  the  charter 
of  all  railroad  corporations  as  to  authorize 
new  streets  to  be  extended  over  their  tracks 
already  laid  on  private  rights  of  way,  it  did 
not  intend  to  grant  and  did  not  in  fact  grant 
a special  franchise.  Nothing  in  the  statute 
or  in  the  history  of  legislature  upon  the  sub- 
ject warrants  such  an  inference.  The  question 
is  not  what  the  legislature  may  do  but  what  it 
has  done. 

“The  object  of  the  Special  Franchise  Tax 
Act  is  to  tax  railroad  corporations  for  privi- 
leges granted  them  in  the  streets  which  they 
occupy  on  their  lines  of  railway  and  if,  after 
they  have  their  rights  of  way  secured  over 
private  land,  a public  highway  is  laid  across 
the  tracks,  while  there  is  a crossing  it  is  not  a 
crossing  made  by  the  railroad  or  through 
public  favor  so  far  as  the  railroad  is  con- 
cerned. The  relator,  or  one  of  its  predeces- 


73 


sors,  was  given  the  right  to  be  a corporation, 
to  acquire  land  and  to  build  its  road  between 
certain  terminal  points.  It  bought  its  right 
of  way  and  built  its  road  accordingly.  It 
needed  no  special  franchise  in  order  to  use 
and  enjoy  its  right  of  way  to  the  utmost  ex- 
tent possible  for  railroad  purposes.  Years 
afterward  a street  was  run  across  its  tracks 
and  a crossing  thus  created.  Such  a crossing, 
made  under  such  circumstances,  is  not  a spe- 
cial franchise  within  the  meaning  of  the 
statute,  because  the  railroad  was  built  on  its 
own  right  of  way  before  the  street  came  into 
existence  and  no  additional  right  was  granted 
to  the  railroad  company  by  the  extension  of  a 
highway  across  its  tracks.”  (Italics  ours.) 

Great  stress  is  laid  by  the  respondents  and  by 
the  learned  Appellate  Division  upon  the  fact  that 
the  Kailroad  Company  secured  the  consent  of  the 
City  by  ordinance  approved  February  1,  1832,  as 
the  owner  in  its  private  cai)acity  of  the  so-called 
common  lands  and  as  donee  of  certain  portions  of 
Park  Avenue  described  in  deeds  of  cession  from 
the  original  owners  to  construct,  maintain  and 
operate  its  railroad.  It  is  claimed  that  this  con- 
stituted a special  franchise.  The  Court  at  Special 
Tenn  made  a finding  that  it  did  not  (fol.  1824). 

'I’lie  case  of  People  ex  I’cl.  Hiiflsoii  and  Manhat- 
tan Railroad  Company  v.  Tax  Connnisfiioners,  203 
X.  V.,  110,  was  decid(*d  nearly  at  tin?  saine  linn*  as 
the  Huffalo  Francliise  3’ax  Case  above  men- 
tioned, and  involve<l  tin*  question  whetlier  a grant 
from  the  Land  Board  of  tin*  l iglit  to  dri\'(*  a tnn- 
in*l  under  tin*  Hudson  l{iv(*r,  upon  or  innl(*i-  land 
owned  by  the  State,  was  a g!'an1  of  a si)eeial  fran- 
chise. In  lif)lding  the  in*gative  of  this  pi-oposi- 
tion,  the  Coui’t  said,  per  ('ull(*n,  Ch.  203  X. 
120; 


74 


“Tlie  action  of  the  land  commissioners  was 
not  a grant  to  the  company  of  any  franchise. 
It  was  simply  a grant  of  a title  to  land. 
Whether  the  letters  patent  conveyed  a fee 
or  an  easement  is  immaterial.  The  Company 
acquired  by  it  such  an  interest  in  the  land  as 
to  authorize  it  to  construct  thereon  its  tun- 
nels and  railroad,  not  under  any  special  fran- 
chise, but  by  virtue  of  its  ownership  of  either 
land  or  an  easement  therein.  ’ ’ 

Judge  Gray,  in  a concurring  memorandum, 
gives  the  following  terse  definition  of  a si)ecial 
franchise,  203  N.  Y.,  132: 

“A  special  franchise  granted  to  a railroad 
corporation  is  a right  accorded  to  it  to  main- 
tain its  road,  where,  without  such  authority, 
to  do  so  would  be  unlawful.  What  public 
places,  or  highways,  are  within  the  legisla- 
tive intent  when  defining  special  franchises 
can  be  determined,  only,  by  the  language  of 
the  statute.  While  the  river  is  a public  high- 
way, that  such  a highway  was  not  in  con- 
templation, when  speaking  of  the  operation  of 
railroads  is  sufficiently  evident  by  the  context ; 
or,  if  not,  it  is  left  in  such  doubt  as  to  de- 
mand more  explicit  legislation.” 

The  Court,  in  its  opinion,  adverts  to  the  cir- 
cumstances that  the  Hudson  River  Railroad 
Company  acquired  from  the  Land  Hoard,  for  the 
purpose  of  its  railroad  right  of  way,  long  stretches 
of  land  under  waters  of  the  Hudson  River  cross- 
ing the  numerous  bays  and  inlets,  and  holds  that 
the  right  thus  obtained  was  in  no  resi)ect  a spe(*ial 
franchise.  We  do  not  see  how  the  situation  nscul 
by  way  of  illustration  by  the  Court  can  be  dif- 
ferentiated from  the  present  one  where  the  rail- 


75 


road  company  acquired  from  tlie  owners  of  a 
strip  of  land,  including  the  City  of  New  York  in 
its  private  capacity,  which  strip  had  never  been 
opened  or  used  as  a public  street,  the  right  to 
lay  its  railroad  tracks  thereon. 

S])ecial  franchises  are  si)ecies  of  ])roi)erty  dis- 
covered but  not  invented  by  the  legislature. 

It  was  apparently  felt  by  counsel  for  the  de- 
fendants during  the  progress  of  this  litigation, 
which  extended  over  a considerable  time  in  ad- 
vance of  the  decision  of  Mr.  Justice  Chester,  now 
held  to  be  erroneous  in  the  Buffalo  Franchise 
case,  that  it  was  quite  unsafe  for  the  defendants 
to  rest  the  legality  of  this  assessment  merely  upon 
the  proposition  that  the  street  had  been  opened  at 
the  time  the  assessment  was  laid.  Counsel  appar- 
ently believed  that  the  subsequent  highway  ques- 
tion would  be  resolved  as  the  Court  of  Appeals 
has  now  decided  it,  and  a very  serious  and  per- 
sistent effort  was  made  to  sustain  the  legality  of 
this  assessment  upon  other  grounds,  which  it 
seems  now  appropriate  to  examine  briefly  and  in 
order. 

1.  Chapter  263  of  the  Laics  of  1831  incorporat- 
ing the  New  York  and  Harlem  Railroad  Com- 
pany, did  not  confer  a special  franchise  upon  the 
railroad  company  as  to  certain  unopened  por- 
tions of  Park  Avenue. 

This  general  proposition  we  have  already  dis- 
cussed. The  fact  that  Fourth  Avenue  was  at  tlu^ 
time  of  the  f)assing  of  this  aet  a pai)er  street 
shown  ui)on  the  inap  of  the  C'ity  of  New  ^'ork,  does 
not  make  its  status  any  different  from  that  of  any 
street  which  might  be  projected  and  laid  out 
across  or  along  the  existing  right  of  way  of  a 
railroad  company  by  lawful  authority.  Tin*  faet 
that  the  title  to  this  strip  of  land  was  vesteci  in 


76 


private  owners  was  fully  recognized  by  the  Legis- 
lature in  the  act  incorporating  the  Harlem  Rail- 
road Company,  as  shown  by  those  sections  of  the 
act  which  provided  for  the  acquisition  of  title  in 
fee  by  the  railroad  company,  by  voluntary  grants, 
or  by  purchase,  or  in  case  of  inability  to  agree 
with  the  owners  by  condemnation  proceedings. 
If  it  had  been  deemed  that  Fourth  Avenue 
throughout  its  length  from  the  Harlem  River  to 
23rd  Street  was  an  opened  jmblic  street  such  pro- 
visions would  have  been  quite  unnecessary,  and 
the  fact  that  Fourth  Avenue  was  at  the  time  un- 
opened, and  merely  a paper  street,  was  recog- 
nized by  the  Legislature  as  shown  by  those  pro- 
visions of  the  incorporating  act  which  required 
the  railroad  company  to  obtain  the  consent  of  the 
City  in  case  the  railroad  were  located  by  its  direc- 
tors upon  an  unopened  street.  After  the  City  had 
approved  the  location  map  of  the  Harlem  Rail- 
road as  required  by  the  incorporating  act,  what 
further  right  remained  outstanding  except  that 
of  the  owners  of  the  soil?  All  the  circnm- 
stances  which  create  the  legal  situation  where 
it  may  be  said  that  a special  franchise  exists, 
are  lacking  here.  As  is  well  known,  and 
has  been  repeatedly  recognized  in  judicial  o])in- 
ions,  the  object  of  the  Ford  franchise  tax 
law  was  to  reach  a species  of  property  not  thereto- 
fore taxable,  and  in  i)ossessing  which,  certain  ele- 
vated and  surface  I’ailroads,  built  u])on  or  over 
existing  jmblic  streets,  enjoyed  an  unfair  exem])- 
tion  as  compared  with  the  ordinary  steam  sur- 
face railroad.  In  the  former  case  the  right  of 
way  of  the  railroad  was  already  acquir(*d  by  the 
City,  its  roadbed  was  const  imcted  and  nothing  re- 
mained but  the  laying  of  rails  on  the  surface,  or 
the  erection  of  the  su])i)orting  columns  of  the 
'"levated  structure  in  the  streets;  all  this  was 


provided  without  cost  to  the  railroad  company. 
Moreover,  the  earnings  of  such  a company  are  al- 
most wholly  dependent  upon  the  fact  that  it  draws 
its  patronage  from  the  very  street  which  it  trav- 
erses. Contrariwise,  tlie  ordinary  steam  sur- 
face railroad  locates  its  own  right  of  way,  ac- 
quires title  thereto  by  purchase,  or  condemnation, 
and  usually  at  a very  large  expense,  and  is  put 
to  the  further  great  expense  of  leveling  inequali- 
ties in  the  earth’s  surface  so  as  to  obtain  a proper 
and  feasible  roadbed  with  suitable  grades. 

This  was  precisely  what  the  New  York  and 
Harlem  Eailroad  Company  did  and  operated  its 
railroad,  paying  taxes  as  locally  assessed  for  its 
private  right  of  way  and  railroad  structures  like 
any  other  ordinary  steam  surface  railroad  trav- 
ersing the  country,  until  20  years  later  the  naked 
fee  of  its  road  bed  was  acquired,  and  merely  nomi- 
nal awards  made  therefor,  so  that  the  City  parted 
with  nothing  in  getting  the  naked  title.  It  would 
seem  palpably  inequitable  that  the  City  should 
under  the  guise  of  an  alleged  special  franchise 
collect  taxes  upon  a heavy  assessment  based  u))ou 
a mere  technical  title  of  the  City  which  cost  it 
nothing  substantial. 

As  has  been  shown,  the  Railroad  (Jomjniny 
parted  with  value  in  securing  its  right  of  way 
by  condemnation  over  the  tract  of  Henson  and 
others;  it  acquired  an  undoubtedly  good  title  in 
fee  from  Archibald  Watt,  Margaret  MeCown, 
Isaac  Adriance  and  others  by  deed.  It  quieted 
title  by  its  long  possession  to  other  portions  of 
the  Avenue.  If  the  Railroad  had  never  been  proj- 
ected or  built,  when  the  City  reached  the  ))oint 
of  opening  Fourth  Aveime,  it  would  hav(*  had  to 
pay  substantial  amounts  for  the  lands  owned  by 
these  private  parties  or  their  f)rivies  in  estate. 


78 

All  this  expense  is  saved  to  the  City.  It  takes 
the  acquisitions  of  the  Railroad  Company  which 
is  awarded  only  nominal  damages;  in  effect  the 
City  secures  title  to  this  portion  of  Fourth  Ave- 
nue for  nothing.  Upon  this  undisputed  basis  of 
fact,  the  learned  Api)ellate  Division  reasons  as 
though  Fourth  Avenue  had  been  opened  through- 
out its  entire  length  in  1831 ; as  though  the  City 
had  acquired  full  title  to  the  land  and  expended 
its  funds  for  grading,  regulating  and  paving  the 
same  for  street  purposes. 

This  wholly  fictitious  and  assumed  situation  it 
says  the  Railroad  Company  is  estopped  from 
questioning.  Why?  We  are  not  enlightened.  The 
judgment  is  pronounced  as  the  finality  in  a proc- 
ess of  reasoning  which  the  opinion  does  not  set 
forth.  The  ordinary  conception  of  an  estop])el  in 
pais  arises  when  a party  makes  a representation 
or  takes  a position,  whether  true  or  false  in  fact, 
on  which  the  party  adversely  interested  or  affect- 
ed, relies  and  changes  his  position  accordingly.  To 
secure  the  ends  of  justice,  the  first  party  is  not 
permitted  to  swerve  from  his  original  ])osition. 
The  most  that  can  be  said  of  the  Harlem  Rail- 
road Company  is  that  it  knew,  when  laying  out 
and  building  its  railroad,  that  Fourth  Avenue 
above  38th  Street  was  a paper  street  laid  down 
on  the  City  Map  made  by  Commissioners  under 
an  Act  of  the  Legislature,  subject  to  change  by  the 
Legislature.  It  knew  that  Fourth  Avenue  might 
some  day  be  opened  as  a public  street ; it  also 
know  that  it  might  not  be  opened.  It  was  at  lib- 
erty to  recognize  what  the  subsequent  years  have 
made  so  clear,  that  the  north  and  south  Avenues 
were  laid  out  too  far  aiuirt;  that  the  Commis- 
sioners were  not  alive  to  the  advantage  of  ]U'o- 
viding  smaller  l)locks  int(M-sected  by  alleys 
for  puiweying  merchandise  and  su))plies  and  re- 


79 


moving  refuse.  It  was  competent  for  it  to  be- 
lieve that  a very  different,  and  more  convenient 
system  of  streets  might  be  laid  out  under  more 
intelligent  auspices.  In  the  latter  event  its  rail- 
road might  well  continue  as  it  had  begun,  upon 
its  own  private  right  of  way.  In  such  a situa- 
tion can  you  impute  to  the  Harlem  Company  a 
declaration  in  substance  that  it  recognized  Fourth 
Avenue  then  merely  projected,  inchoate,  contin- 
gent, as  an  open  public  highway,  the  title  all  in 
the  City,  the  facilities  and  functions  of  a public 
thoroughfare  all  in  existence?  Does  a mere  re- 
quest for  the  City’s  approval  to  the  location  of 
the  railroad  upon  and  along  a paper  street,  carry 
with  it  the  implied  assurance  of  the  Railroad  Com- 
pany that  it  would  forever  thereafter  recognize  an 
assumed  title  to  the  land  in  the  street  as  vested 
in  the  City,  in  such  sense  that  the  grant  in  its 
charter  to  build  a railroad  must  be  viewed  in  tlie 
same  light  as  the  grant  of  a si^ecial  franchise  to  lay 
its  tracks  upon  the  surface  of  an  opened,  graded, 
regulated  and  constructed  public  street?  If  this 
be  true  as  a legal  proposition,  why  did  the  City 
in  the  street  opening  proceeding  recognize  any 
title  whatever  in  the  Harlem  Company?  Such 
title  was  recognized.  The  awards  though  nomi- 
nal were  made,  confirmed  by  the  Court  and  paid. 
If  an  estoppel  can  be  created  by  the  solemn  and 
deliberate  adjudication  of  a court  of  competent 
jurisdiction,  it  was  created  here,  but  that  estop] )el 
instead  of  closing  the  month  of  the  Harlem  Com- 
pany precludes  the  defendant  Tax  Commission- 
ers and  the  Intervenor  from  asserting  the  exist- 
ence of  a special  franchise  in  this  case. 

2.  Neither  the  filiuf/  of  the  floerck  map,  Inifinfi 
out  the  East  Jioafl  i(pnti  the  Common  Lands  of 
the  City  of  New  York,  nor  the  suhseqnent  fiimy 


80 


of  the  City  map  in  1811  pursuant  to  Chapter  115 
of  the  Laws  of  1807,  ivas  a dedication  of  the  lands 
included  within  the  lines  of  such  paper  streets,  in 
such  sense  as  to  constitute  such  strips  pnhlic 
streets  within  the  definition  of  the  tax  law  regard- 
ing special  franchises. 

It  was  argued  in  behalf  of  the  defendants  that 
as  the  title  to  the  East  Road  covering  the  portion 
of  Fourth  Avenue  as  laid  out  on  the  city  map, 
within  the  limits  of  the  Common  Lands  of  the  City 
of  New  York,  was  vested  in  the  city,  and  as  i)ar- 
cels  of  the  Common  Lands  had  been  sold  by  the 
City  to  private  parties  abutting  on  this  road,  as 
indicated  by  the  exhibits  offered  in  evidence  by 
the  defendants,  and  as  also  shown  on  the  Haviland 
map.  Relator’s  Exhibit  AAA  (p.  957),  and  as  cer- 
tain portions  of  the  bed  of  Fourth  Avenue  north- 
erly of  the  Common  Lands  had  been  ceded  for 
street  purposes  to  the  city  at  the  time  the  charter 
of  the  New  York  and  Harlem  Railroad  Company 
was  granted  by  the  Legislature;  therefore,  the 
right  given  to  locate  its  road,  with  the  consent  of 
the  city,  in  Fourth  Avenue  was  a special  fran- 
chise. 

We  think  that  the  adjudged  cases  fully  answer 
this  contention. 

In  Matter  of  Rhinelander  (68  N.  Y.,  105)  the 
City  of  New  York  had  built  a sewer  in  that  portion 
of  91st  Street  lying  between  Second  and  Fourth 
Avenues,  91st  Street  having  been  laid  down  on  the 
Commissioners’  map  made  under  the  Act  of  1807 
and  filed  in  1811,  and,  therefore,  answering  pre- 
cisely to  llie  same  description  as  Fourth  Avenue 
north  of  the  south  line  of  45th  Street.  No  pro- 
ceeding to  open  91st  Street  between  the  limits  in- 
dicated had  ])een  carried  to  a com})letion  at  the 
time  the  sewer  was  constructed  and  the  assess- 


81 


ment  therefor  laid.  The  Court  held  that  the  as- 
sessment was  void.  Referring  to  the  city  map, 
Earl,  J.,  says,  at  p.  107 : 

“But  that  map  was  wholly  the  act  of  the 
municipal  authorities.  Property  owners  had 
nothing  to  do  with  it.  It  was  made,  not  to 
indicate  streets  actually  laid  out,  but  as  a 
plan  for  future  improvements  and  growth  of 
the  city.  Future  streets,  when  opened,  were 
expected  to  be  opened  as  laid  out  on  the  map ; 
and  the  streets  thus  indicated  could  he  opened 
only  after  dedication  by  the  owners  of  the 
land  or  the  regular  action  of  the  municipal 
authorities  for  that  purpose.  Hence  the  fact 
that  this  street  is  indicated  on  the  map  has 
no  significance.  The  fact  that  the  laud  on 
each  side  of  the  street  has  been  divided  into 
lots  has  no  significance.  This  division  into 
lots  was  made  by  the  municipal  authorities 
for  the  pur[jose  of  assessments  and  not  by  the 
owners  of  the  land.  A few  houses  have  been 
built  along  the  line  of  the  street,  but  in  build- 
ing houses  the  owners  of  the  land  are  ex- 
pected to  regard  the  lines  of  the  street  so  as 
not  to  interfere  with  the  opening  of  the  street, 
when  the  time  shall  come  to  open  it,  or  with 
the  plan  of  the  city  as  laid  down  on  the  map. 
It  is  shown  that  there  has  l)een  some  travel 
by  the  public,  for  many  years  past,  in  some 
portion  of  the  street,  between  Second  and 
Fourth  Avenues.  But  it  is  not  shown  under 
what  circumstances  the  travel  took  place,  nor 
the  condition  of  the  land  in  the  vicinity  of  the 
street.  The  i)assage  by  the  pul)lic  over  open, 
waste,  useless  land  for  many  years,  would 
furnish  but  little,  if  any,  evidence  of  itself 
that  the  locus  was  a str(*et.  It  matters  not 
that  the  owner,  in  dealing  with  his  own  ])rop- 
erty,  treated  this  for  some  purposes  as  a 


82 


street,  because  it  was  laid  down  upon  the  city 
map  as  a street,  and  in  the  growth  and  im- 
provement of  tlie  city  was  inevdtably  some 
day  to  become  one. 

***** 

It  is  therefore  clear  that  the  place  indi- 
cated was  not  a street;  that  the  municipal 
authorities  in  constructing  the  sewer  there 
were  trespassers,  and  that  no  assessment 
could  be  legally  laid  to  pay  the  expense  of 
such  a trespass.” 

In  Mott  A's.  Eno  (181  N.  Y.,  346),  Cullen,  Cli.  J., 
in  discussing  the  city  map,  and  its  origin  under 
the  act  of  1807,  says,  page  376: 

“The  act  of  1807  provided  for  the  establish- 
ment by  the  commissioners  appointed  there- 
under of  a permanent  plan  for  the  streets 
and  avenues  of  the  City  of  New  York.  It  did 
not  operate  as  a present  opening  of  those 
streets  or  a dedication  of  the  land  therein  to 
public  use,  but  provided  that  the  municipal 
authorities  might  subsequently  open  streets 
in  accordance  with  that  plan  to  which  plan 
those  authorities  were  restricted.”  (Citing 
Matter  of  Rhinelander,  68  N.  Y.,  105). 

In  People  ex.  rel.  Retsof  Minina  Enmnanv  vs. 
State  Board  of  Tax  Commissioners  (75  App.  Div., 
131),  the  A])pellate  Division,  Third  Department, 
held  that  the  right  to  lay  pipes  in  a town  high- 
way, granted  by  the  owners  of  the  fee,  is  not  a 
franchise.  This  decision  was  affi)-nied  in  179  N. 
Y.,  511,  without  opinion  other  than  that  expressed 
by  the  Court,  viz. : 

“on  the  ground  that  relator’s  pro])erty  right 
sought  to  be  taxed  herein  is  not  a s])ecial 
franchise  within  the  meaning  of  the  tax  law.” 


S3 


In  this  case  the  relator  had  secured  the  consent 
and  grant  of  abutting  owners  in  a town  highway, 
the  fee  of  which  was  vested  in  such  abutting  own- 
ers, to  lay  its  pipes  under  the  surface  of  such 
highway.  It  had  not,  however,  secured  any  ex- 
press grant  from  the  State,  or  other  public  body 
to  lay  such  pipes  in  said  highway.  In  reversing 
the  assessment  of  the  State  Board,  which  had 
been  confirmed  by  the  Court  below,  Kellogg,  J., 
says  at  page  133 : 

“The  ‘franchise’  here  does  not  mean  the 
right  to  exercise  corporate  functions  but  the 
right  to  use  the  public  streets,  highways,  or 
public  places,  either  as  an  individual  or  cor- 
poration. The  right  to  so  use  the  public 
streets,  highways  or  public  places  is  a prop- 
erty right,  and  it  is  because  such  property  has 
value  that  the  right  exists  to  assess  it.  The 
‘franchise,  right  authority  or  permission,’ 
here  mentioned  must  mean  some  special  privi- 
lege derived  from  some  governmental  body, 
or  some  political  body,  having  authority  to 
grant  the  property  rights  sought  to  be  taxed. 
It  is  this  species  of  proi)erty,  intangible  in  its 
nature,  which  the  law  was  enacted  to  reach. 
• * • The  purpose  of  the  law,  1 think,  is 

obvious.  Its  purpose  was  to  reach  and  assess 
those  rights  in  streets,  highways  and  ])ublic 
places  which  once  ladonged  to  the  laiblic  at 
large,  or  to  political  divisions  of  the  State, 
and  wliich  had  been  granted  for  a term,  oi'  in 
y)erpetuity,  to  individuals  or  corporate  bodies, 
and  if  this  is  the  ol)vious  ))ur|)ose  of  tlu^  law 
it  follows  that  where  nothing  has  been  granteil 
there  is  nothing  for  the  Itoai’d  of  Tax  Coiti- 
missioners  to  assess.’’ 

It  is  not  disyiiited  that  no  yirocecidings  were 
taken  to  open  Hast  Road,  nor  subsequently 


84 


Fourth  Avenue,  East  Road  being  substantially 
included  within  the  lines  of  Fourth  Avenue, 
until  the  proceedings  instituted  in  1850,  nearly  20 
years  after  the  Harlem  Railroad  had  been  in  pos- 
session of  its  roadbed. 

It  is  not  questioned  that  the  City  at  all  times 
owned  the  fee  of  the  so-called  East  Road,  and  of 
the  lands  adjoining  the  same  on  the  east,  the  only 
plots  being  sold  off  being  on  the  west  of  the  East 
Road,  except  some  plots  between  74th  and  82nd 
Streets.  The  East  Road  so  called  ran  west  of 
and  partly  included  the  24-foot  strip  occupied  by 
the  New  York  and  Harlem  Railroad,  its  east  line 
being  about  one  foot  westerly  of  the  east  line  of 
said  24-foot  strip. 

Attention  was  drawn  on  the  argument  below 
by  defendants’  counsel  to  the  case  (already  here- 
inbefore noticed  of  Graham  vs.  Stern  (168  N.  Y., 
517).  This  case  grew  out  of  the  efforts  on  the 
part  of  the  City,  and  the  owners,  to  accommodate 
the  layout  of  lots  and  streets  as  shown  on  the  old 
Goerck  map  of  the  Common  Lands  to  the  layout 
as  shown  on  the  city  map  filed  in  1811.  The  case 
recognizes  the  right  of  the  City  to  deal  with  its 
own  land  as  a ])rivate  owner  could  do,  and  is  au- 
thority for  the  pro])osition  that  in  conveying  the 
])lots  bounded  by  these  streets,  which  subsequently 
l)ecame  portions  of  tbe  streets  and  avenues  laid 
out  on  the  city  map  of  1811,  the  presum))tion  is 
tliat  tlie  City  intended  to  retain  in  itself  the  fee  of 
the  land  in  these  streets,  and  not  to  convey  such 
fee  to  the  ])urchaser  of  lots  or  {dots  abutting 
thereon. 

Y e fail  to  see  that  the  case  has  any  jnirticular 
bearing  upon  the  issues  iii  this  controversy,  cer- 
tainly none  unfavorable  to  relator.  There  is 
nothiiig  in  Judge  Gray’s  o])inion  which  siqiports 


the  assertion  made  by  the  defendants  that  the 
mere  filini>:  of  a map  constitutes  a public  street 
so  that  the  right  thereafter  granted  to  the  rail- 
road comi)any  to  occupy  a pa])er  street  is  a spe- 
cial franchise  within  the  terms  of  the  tax  law. 

In  view  of  this  situation,  and  in  view  of  the  fact 
that  these  lands  were  owned  by  the  City  in  its  pri- 
vate capacity  and  not  as  a subordinate  branch  of 
the  State,  it  appeared  that  in  addition  to  the  con- 
sent which  the  City  had  given  to  the  occupation  of 
the  pai)er  street  under  the  tenns  of  the  charter  of 
the  New  York  and  Harlem  Kailroad  Company,  a 
further  consent  or  license,  or  authority,  should  be 
obtained  from  it  for  the  occupation  of  lands  which 
it  owned  in  its  private  capacity.  An  examination 
of  the  authorities  of  this  State  on  the  subject 
shows  very  distinctly  that  the  City  had  rights  in 
these  lands  which  were  separate  and  distinct  from 
its  rights  and  obligations  as  a subordinate  instru- 
mentality of  the  State  government. 

The  leading  case  upon  the  distinction  between 
the  ])ublic  and  ])rivate  powers  of  a municijiality 
appears  to  be  Bailey  vs.  Mayor,  &c.,  of  New  York 
(d  Hill,  o29) — an  action  for  damages  dm*  to  tb.e 
negligent  construction  of  a dam. 

Nelson,  Ch.  J.,  in  the  course  of  his  o))inion  in 
this  case,  said : 

“The  argument  of  the  defendants’  counsel 
confounds  the  powers  in  question  with  those 
belonging  to  the  defendants  in  their  charac- 
ter as  a municipal  or  i)ublic  duty — such  as 
are  granted  exclusively  for  })ublic  |)urposes 
to  counties,  cities,  towns  and  villages,  whei’e 
the  corporations  have,  if  I may  so  speak,  no 
private  estate  or  interest  in  the  grant.  As 
the  powers  in  question  have  been  conferre*! 
upon  one  of  these  ])ublic  cor|)orations,  thus 
blending  in  a measure  those  conteired  for 


86 


private  advantage  and  emolument  with  those 
already  possessed  for  public  purposes,  there 
is  some  difficulty  I admit  in  separating  them 
in  the  mind,  and  properly  distinguishing  the 
one  class  from  the  other,  so  as  to  distribute 
the  responsibility  attaching  to  the  exercise  of 
each.  But  the  distinction  is  (piite  clear  and 
well  settled,  and  the  process  of  separation 
practicable.  To  this  end  regard  should  be 
bad,  not  so  much  to  the  nature  and  character 
of  the  various  powers  conferred,  as  to  the 
object  and  }nirpose  of  the  legislature  in  con- 
ferring them.  If  granted  for  public  purposes 
exclusively,  they  belong  to  the  corporate  body 
in  its  public,  political  or  municipal  character. 
But  if  the  grant  was  for  purposes  of  private 
advantage  and  emolument,  though  the  public 
may  derive  a common  benefit  therefrom,  the 
corporation  quoad  hoc,  is  to  be  regarded  as 
a private  company.  It  stands  on  the  same 
footing  as  would  any  individual  or  body  of 
persons  upon  whom  the  like  special  franchises 
have  been  conferred.  (Citing  authorities.) 
Suppose  the  legislature  instead  of  the  fran- 
chise in  question  had  conferred  ni)on  the  de- 
fendants banking  powers,  or  a charter  for  a 
railroad  leading  into  the  city,  in  the  usual 
manner  in  which  such  powers  are  conferred 
upon  private  companies;  conld  it  lie  doubted 
that  they  would  hold  them  in  the  same  char- 
acter, and  be  subject  to  the  same  duties  and 
liabilities?  I cannot  doubt  but  they  would. 
These  powers,  in  the  eye  of  the  law,  would  be 
entirely  distinct  and  separate  from  those  ap- 
pertaining to  tile  defendant  as  a munici])al 
body.  So  far  as  related  to  the  character  thus 
conferred,  they  would  lie  regarded  as  a pri- 
vate com])anv  an<l  be  subject  to  the  resiionsi- 
bilities  attaching  to  that  class  of  institu- 
tions.” 


87 


In  the  case  of  Brick  Presbyterian  Church  vs. 
City  of  Xeiv  York  (5  Cowen,  538),  an  action  was 
brought  against  the  city  for  an  alleged  breach  of 
the  covenant  of  quiet  enjoyment,  contained  in  the 
deed  from  the  city  to  plaiiititf’s  predecessors  in 
title.  The  deed  provided  that  the  land  should  be 
used  for  church  or  cemetery  purposes,  and  subse- 
quently the  city  passed  an  ordinance  prohibiting 
such  use  of  the  premises. 

Savage,  Ch.  J.,  in  this  case  said : 

“The  defendants  are  a corporation,  and  in 
that  capacity  are  authorized  bj’  their  charter, 
and  by  law,  to  purchase  and  hold,  sell  and 
convey  real  estate,  in  the  same  manner  as 
individuals.  They  are  considered  a person 
in  law  within  the  sco^je  of  their  corporate 
powers;  and  are  subject  to  the  same  liabili- 
ties, and  entitled  to  the  same  remedies  for  the 
molation  of  contracts,  as  natural  persons. 
They  are  also  clothed,  as  well  by  their  char- 
ter, as  by  subsequent  statutes  of  the  State, 
with  legislative  powers;  and  in  the  capacity 
of  a local  legislature,  are  particularly 
charged  with  the  care  of  the  public  morals 
and  the  public  health  within  their  own  juris- 
diction.” 

In  Fire  Insurance  Co.  vs.  Keeseville  (148  N.  Y., 
52),  Gray,  J.,  said  : 

“The  distinction  between  the  public  and 
private  powers  conferred  u))on  municipal  cor- 
porations, although  the  line  of  demarkation 
at  times  may  be  difficult  to  ascertain  is  gen- 
erally clear  enough AVbere  we  find 

that  the  power  conferred  has  relation  to  pub- 
lic pur[)Oses  and  is  for  the  ])ublic  good,  it  is 
to  be  classified  as  gover-nmental  in  its  nature! 
and  it  ap])ertains  to  the  cor])oi'atioTi  in  its 


88 


particular  cliaraoter.  Bat  when  it  relates  to 
the  accomplishment  of  ])rivate  corporate  pur- 
poses, in  which  the  public  is  only  indirectly 
concerned,  it  is  private  in  its  nature  and  the 
municipal  corporation  in  respect  to  its  exer- 
cise is  regarded  as  a legal  individual.” 

See  also  Clark  vs.  Sprague  No.  2 (113  App. 
Div.,  645),  which  was  an  action  to  compel  defend- 
ants to  take  titles  tendered  by  plaintiffs.  Title 
was  derived  from  tax  sale  of  premises  for  taxes 
levied  by  the  city,  while  the  city  was  owner  of  the 
premises  in  question.  Held  that  the  city  held  title 
as  a private  owner  and  was  subject  to  pay  taxes 
thereon. 

Webb  vs.  Mayor,  etc.,  of  N.  Y.,  (64  How.  Pr., 
10),  was  an  action  to  restrain  the  defendants  from 
carrying  into  effect  the  provisions  of  Chapter 
456,  Laws  of  1881,  on  the  ground  that  the  act  was 
unconstitutional. 

Macomber,  J.,  in  the  course  of  his  opinion  in 
this  case  said : 

‘ ‘ But  a more  interesting  question  is  pre- 
sented by  the  claim  made  in  behalf  of  plain- 
tiffs, that  the  act  is  unconstitutional  because 
it  violates  the  rights  of  property  of  the  City 
of  New  York.  The  land  which  is  covered  by 
the  reservoir,  together  with  the  land  west  of 
it  known  as  Eeservoir  Square,  was  granted 
in  fee  simi)le  to  the  city  by  what  is  known  as 
the  Dongan  Charter  in  1686.  That  charter  is 
substantially  embodied  in  the  Montgomerie 
Charter,  so  called,  of  1730.  The  Third  Sec- 
tion of  the  Dongan  Charter  is  as  follows 
(quoting  same)  .***** 

“The  same  power  is  reiterated  and  re- 
stated in  the  twelfth  section  and  in  the  four- 
teenth section.  The  same  rights  were  re- 
stated in  the  thirty-sixth  and  thirty-seventh 


89 


sections  of  the  Montgomerie  charter.  The 
last  charter  was  confirmed  by  the  colonial 
legislature  in  1732,  and  again  by  the  constitu- 
tions of  1777,  of  1821  and  of  1846. 

“The  lands  in  question,  therefore,  are 
owned  by  the  city  in  fee  simple  absolute.  This 
was  so  held  in  the  case  of  Furman  vs.  New 
York  (5  Sand  S.  C.,  16)  and  in  the  same  case 
10  N,  Y.,  567).  If  therefore  the  legislature 
has  undertaken  by  its  acts  to  destroy  the 
property  of  this  cori)oration,  or  to  deprive  the 
city  of  its  use,  without  just  compensation,  it 
has  violated  a fundamental  law  of  the  state.” 

Towle  vs.  Remsen  (70  N.  Y.,  302),  was  an  action 
of  ejectment  to  recover  possession  of  certain  lands 
under  water  of  the  City  of  New  York,  being  part 
of  the  tideway.  Both  parties  claimed  under 
grants  from  the  city.  Miller,  J.,  in  the  course  of 
his  opinion  said,  at  page  308 : 

“We  j)ass  then  to  a consideration  of  the 
question  arising  under  the  grant  of  the  City 
of  New  York  to  the  heirs  of  Mark  Clark  in 
1827,  under  whom  the  defendants  claim  title. 
The  land  under  water  originally  belonged  to 
the  Crown  of  Great  Britain,  and  i)assed  by 
the  Kevolution  to  the  State  of  New  York. 
The  j)ortion  between  high  and  low  water 
mark  known  as  the  tideway,  was  granted  to 
the  city  by  the  early  charters  (l)ongan  Char- 
ter, Secs.  3 and  14;  Montgomerie  Charter, 
Sec,  37),  and  the  corporation  have  an  abso- 
lute fee  in  the  same.  (Mott  vs.  Thayer,  2 
Bosw.,  61).  It  necessarily  follows  that  the 
city  had  a perfect  right,  when  it  granted  to 
the  devisees  of  Clarke,  to  make  the  grant  of 
their  portion  of  the  land  in  f(,*e  simple  abso- 
lute.” 


90 


Langdon  vs.  The  Mogur,  etc.  (93  N.  Y.,  129),  was 
an  action  to  recover  damages  sustained  by  tlie 
erection  of  a new  wharf  in  front  of  plaintiff’s 
wharf  ui)on  the  Hudson  River,  cutting  off  access 
to  plaintiff’s  wharf. 

Earl,  J.,  in  the  course  of  his  opinion  in  this  case 
said,  at  page  143 : 

“The  city  took  the  fee  to  the  land  under 
water  granted  to  it  by  the  Dongan  and  Mont- 
gomerie charters,  and  the  right  to  build 
wharves  and  docks  thereon,  and  to  take  and 
have  the  wharfage  accruing  therefrom.  It 
could  grant  the  lands  to  individuals  with  all 
the  rights  and  privileges  which  it  possessed; 
and  it  did,  in  fact,  prior  to  1798,  make  many 
such  grants. 

‘Under  the  act  of  April  3,  1798,  as  well  as 
under  acts  prior  thereto,  general  authority 
was  conferred  upon  the  city  to  lay  out  and 
construct  wharves,  and  the  general  system 
seems  to  have  been  for  the  city  to  convey  the 
land  under  water  to  individuals,  requiring 
them  to  fill  up  the  land  and  construct  the 
wharves,  with  the  right  to  receive  the  wharf- 
age, which  sjvstem  was  repeatedly  recognized 
by  the  legislature.” 

In  flatter  of  The  Mayor,  etc.  (18(1  N.  Y.,  241), 
the  (piestion  consi<lered  was  whether  an  award  in 
street  opening  proceedings  should  be  made  for 
land  owned  by  the  city  and  acquired  for  i)uiq)oses 
of  a pipe  line. 

Chase,  J.,  in  the  course  of  his  oi)inion  in  this 
case,  said : 

“Real  pro])erty  is  purchased  and  acquired 
by  municipalities  for  different  iuiri)oses;  it  is 
held  in  fee  or  otherwise  de])endent  in  ])art 
upon  the  authority  by  which  it  is  purchased 


91 


or  acquired.  The  consideration  for  real  prop- 
erty so  purchased  or  acquired  for  certain  pur- 
poses is  i)aid  by  taxes  levied  upon  all  the  tax- 
able property  within  the  municipality,  and 
for  certain  other  purposes  by  special  assess- 
ment levied  upon  the  property  of  individuals 
and  corporations  specially  and  i)ecnliarly 
benefited  by  the  improvement  which  requires 
the  acquisition  of  such  real  property.  The 
lands  of  the  City  of  New  York  in  question 
were  acquired  in  fee  simple  absolute,  and  the 
bonds  given  to  raise  the  money  to  pay  there- 
for, if  still  unpaid,  are  a general  charge 
against  the  city.” 

Again  at  page  244: 

“Persons  owning  real  property  abutting 
upon  other  real  property  owned  by  a munici- 
pality do  not  have  easements  in  or  over 
the  municipal  property  simply  because  the 
property  is  owned  by  a municipality  and  not 
by  an  individual.  Real  property  acquired  by 
a municii)ality  for  general  corporate  pur- 
poses, and  not  for  street  or  other  special  i)ur- 
poses,  is  held  pursuant  to  the  deeds  of  con- 
veyance the  same  as  individuals  hold  real 
proj^erty.  The  abutting  owners  u])on  the 
lands  in  question  j^rior  to  this  proceeding  did 
not  have  any  right  of  access  over  the  same  or 
right  to  protect  the  free  circulation  of  light 
and  air  to  their  property.  I’lie  maintenance 
of  a [)ul)lic  street  secures  to  abutting  owners 
certain  rights  and  easements  which  consti- 
tute bcmetits  to  such  abutting  owiicis.  When 
lamls  are  ac(|uired  by  a municipality  and 
j)aid  foi'  by  special  assessment,  there  is  an 
implied  contract  that  the  benefits  derived  by 
the  payment  of  such  assessment  shall  be  [iro- 
tected.” 


92 


And  again  at  page  245 : 

“Wliere  the  absolute  and  unqualified  title 
to  land  is  owned  by  a municipality  it  may  be 
used  for  any  of  the  purposes  of  such  munici- 
]iality  (Whitney  vs.  State  of  New  York,  96 
N.  Y.,  240 ; Eldridge  vs.  City  of  Binghamton, 
120  id.,  309).  So  far  as  the  City  of  New  York 
is  concerned,  it  could  undoubtedly  have  de- 
voted this  land  to  street  purposes.  As  the 
City  owned  the  property  in  question  in  fee 

* simple  absolute  it  could  have  erected  thereon 
a public  building,  maintained  thereon  a pub- 
lic park  or  street,  or,  if  the  property  was  not 
j equired  for  the  purposes  of  the  water  sup- 
ply, it  could  have  been  sold  and  the  proceeds 
of  the  sale  applied  to  the  general  purposes  of 
the  corporation  and  to  the  advantage  of  the 
general  taxpayer.” 

See  also  Mount  Hope  Cemetery  vs.  City  of 
Boston,  158  Mass.,  509. 

We  think  the  legal  effect  of  the  consent  of  the 
City  to  occupy  lands  owned  by  it  in  its  private  ca- 
pacity, as  evidenced  by  the  ordinance  approved 
February  1st,  1832,  is  similar  to  the  granting  of 
lauds  under  public  waters  belonging  to  the  Peo])le 
of  the  State  of  New  York  by  the  Land  Board. 
See  People  ex  rel.  The  Hudson  d'  Manhattan  Rad- 
icaij  Company  vs.  State  Board  of  Tax  Commis- 
sioners, 203  N.  Y.,  119. 

Notwithstanding,  extraordinary  legal  effect  is 
(‘laimed  as  the  result  of  the  filing  of  fhe  cify  imqi 
in  1811.  AVo  have  already  cifed  aufhorities  indi- 
cafing  thaf  fhe  effect  of  this  ma]i  was  not  in  anv 
way,  sha])e  or  manner  to  ai)iiropriate  the  streets 
Ihereon  shown  for  public  use,  hut  merely  to  indi- 
cate a idan  for  the  future  develo))ment  of  the  city. 


93 


Unless  the  defendants  can  show  that  the  effect  of 
filing  the  inaj)  in  question  was  to  create  the  public 
streets  thereon  shown  their  attempt  to  justify  the 
legality  of  the  assessment  must  fail. 

It  is  claimed  that  under  Chapter  115  of  the  Laws 
of  1807  and  under  the  General  Act  of  1813,  pursu- 
ant to  which  and  amending  legislation  Fourth 
Avenue  was  opened,  there  was  a provision  to  the 
effect  that  no  compensation  should  be  allowed  to 
abutting  owners  for  any  improvements  which 
they  might  make  within  the  lines  of  the  streets, 
including  Fourth  Avenue,  as  laid  out  on  the  city 
map,  provided  such  improvements  were  placed 
there  subsequent  to  the  filing  of  the  map. 

The  learned  Appellate  Division,  while  appar- 
ently recognizing  that  a natural  person  might  have 
successfully  challenged  the  constitutionality  of 
such  a provision,  suggest  that  the  relator  is  a 
statutory  person  and  therefore  precluded  from 
raising  such  an  objection.  Why? 

We  has  supposed  that  the  construction  given  by 
the  Federal  Supreme  Court  to  the  14th  Amend- 
ment of  the  Constitution  of  the  United  States  had 
set  at  rest  the  contention  that  a corf)oration  can- 
not invoke  its  i)rotection  or  that  of  any  other  con- 
stitutional provision  with  tin*  same  degix*e  of  light 
as  an  individual. 

See 

Santa  Clara  Count  if  vs.  So.  Pac.  Ily.  Co., 
118  U.  S.,  394;  ‘ 

Covington,  etc.,  Turnpike  Poarl  Co.  vs. 
Sand  ford,  1(54  U.  S.,  578,  592; 

Smyth  vs.  Ames,  lb9  IT.  S.,  522; 

Lake  Shore,  etc.,  Py.  Co.  vs.  Smith,  173 
U.  S.,  084,  090. 

The  defendants  do  not  question  the  authority  of 
the  case  of  Forster  vs.  Scott  (130  X.  V.,  58.3),  in 


94 


wliicli  a similar  provision  with  reference  to  maps 
filed  showing  streets  in  the  Bronx  was  held  uncon- 
stitutional. The  effect  of  the  decision  in  Forster 
vs.  Scott  is  attempted  to  be  avoided  on  the  ground 
that  the  State  constitution  in  force  in  1807,  when 
the  act  appointing  the  commissioners  to  lay  out 
the  city  into  streets  was  passed,  in  1811,  when  the 
map  was  filed,  and  in  1813,  when  the  general  act 
in  regard  to  opening  streets  was  passed,  contained 
no  provision  prohibiting  the  taking  of  private 
property  for  public  use  except  upon  payment  of 
just  compensation  and  that  such  provision  did 
not  find  a place  in  the  Constitution  until  1821  and 
that  the  amended  Constitution  of  that  year  recog- 
nized the  validity  of  this  Act  of  1813. 

If,  however,  we  examine  the  reasons  stated  by 
the  Court  of  Appeals  in  the  Forster  case  for  hold- 
ing Chapter  681  of  the  Laws  of  1886  unconstitu- 
tional, we  find  two  grounds  stated;  first,  that  it 
deprived  the  owner  of  private  property  without 
making  just  compensation,  and,  second,  that  it  de- 
prived the  owner  of  his  enjoyment  and  possession 
without  due  process  of  law. 

If,  therefore,  we  find  that  there  was  embedded 
in  the  State  Constitution  in  force  in  1807, 1811  and 
1813  a due  process  of  law  provision  it  follows  that 
the  provision  in  the  Act  of  1813  forbidding  com- 
pensation to  owners  who  had  made  erections  upon 
their  lands  subsequent  to  the  filing  of  the  mai)  is 
and  then  was  unconstitutional  under  the  authority 
of  Forster  vs  Scott,  which,  therefore,  plainly  and 
flatly  overrules  the  early  cases  cited  by  the  de- 
fendants, ]n-incii)ally  Matter  of  29th  Street  (1 
TTill,  189);  Matter  of  39/A  Street  (1  TTill,  191), 
and  particularly  Matter  of  127/A  Street  (56  Tlow, 
Br..  660). 

The  latter  is  a Special  Term  opinion  by  Daniels, 


95 


J.  One  feature  of  the  ease  is  expressly  disap- 
proved by  Cullen,  J.  (now  Chief  Justiee  of  the 
Court  of  Appeals),  in  the  Matter  of  Opening  Rog- 
ers Avenue  (29  Abbott’s  N.  C.,  361). 

See  also  Matter  of  116tk  Street  (1  App.  Div., 
436),  in  which  the  rule  of  damage  announced  in 
the  Matter  of  29th  Street  and  Matter  of  39th 
Street  was  expressly  repudiated. 

Taking  up,  then,  the  due  process  of  law  provi- 
sion, its  history  is  traceable  from  the  very  begin- 
nings of  the  common  law. 

The  39th  Chapter  of  the  Magna  Charta  of  King 
John  provided  that: 

“Xo  freeman  shall  be  taken,  or  imprisoned 
or  disseized  or  outlawed,  or  exiled,  or  in  any 
wise  destroyed;  nor  shall  we  go  upon  him, 
nor  send  upon  him,  but  by  the  lawful  judg- 
ment of  his  peers  or  by  the  law  of  the  land.” 

Section  XIII.  of  the  Constitution  of  New  York 
of  1777  provided : 

“And  this  convention  doth  further,  in  the 
name  and  by  the  authority  of  the  good  people 
of  this  State  ordain,  detennine  ami  declare. 
That  no  member  of  this  State  shall  be  dis- 
franchised, or  deprived  of  any  rights  or  priv- 
ileges secured  to  the  subjects  of  this  State  by 
tliis  Constitution,  unless  by  the  law  of  the 
land,  or  the  judgment  of  his  peers.” 

This  was  in  effect  the  39th  Chapter  of  Magna 
Charta.  See  Lincoln’s  Constitutional  History  of 
New  York,  \'ol.  1,  page  522. 

Section  1 of  Article  \Hr.  of  the  Constitution  of 
New  York  of  1821  y)rovided  : 

“No  member  of  this  State  shall  he  dis- 
franchised or  deprived  of  any  of  the  rights 


96 


or  privileg’es  secured  to  any  citizen  thereof 
unless  by  tlie  law  of  the  land,  or  the  judg- 
ment of  his  peers.” 

Article  1 of  Section  7 of  the  Constitution  of 
1821,  became  Article  1 of  Section  1 of  the  Consti- 
tution of  New  York  of  1846,  and  is  now  Article  1 
of  Section  1 of  the  present  Constitution  of  1894. 

Kent’s  Commentaries  2,  page  13,  in  discussing 
the  above  provision  of  Magna  Charta,  says : 

“The  Constitution  of  the  United  States, 
and  the  Constitution  of  almost  every  State 
in  this  Union  contains  the  same  declarations 
in  substance,  and  nearly  in  the  same  lan- 
guage, and  where  express  constitutional  pro- 
visions on  this  subject  appear  to  be  wanting, 
the  same  principles  are  probably  asserted  by 
declaratory  legislative  acts;  and  they  must 
be  regarded  as  fundamental  doctrines  in 
every  State,  for  the  colonies  were  parties  to 
the  national  declaration  of  rights  in  1774,  in 
which  the  trial  by  jury,  and  the  other  rights 
and  liberties  of  English  sul)jects,  were  per- 
emptorily claimed  as  their  undoubted  inherit- 
ance and  birthright. 

‘ ‘ It  may  be  received  as  a proposition 
throughout  this  country,  that  no  person  can 
be  taken  or  imprisoned ; or  disseized  of  his 
freehold  or  estate ; or  condemned;  or  deprived 
of  life,  liberty  or  property,  unless  by  the  law 
of  the  land  or  the  judgment  of  his  peers. 
The  words  ‘by  the  law  of  the  land’  as  used 
originally  in  Magna  Charta,  in  reference  to 
this  subject,  are  understood  to  mean  ‘due 
process  of  law,’  that  is,  by  indictment  or  pre- 
sentment of  good  and  lawfnl  men;  and  this 
says  Lord  Coke  is  the  true  sense  and  ex])o- 
sitioji  of  those  words.  The  better  and  larger 
definition  of  dne  process  of  law  is,  that  it 


97 


means  law  in  its  regular  course  of  adminis- 
tration through  courts  of  justice.” 

In  Bank  of  Columbia  vs.  Oakley,  4 AVheaton,  at 
page  242,  Jackson,  J.,  in  discussing  the  meaning 
of  the  law  of  the  land,  said: 

“As  to  the  words  from  Magna  Charta  in- 
corporated into  the  Constitution  of  Maryland, 
after  volumes  spoken  and  written  with  a view 
to  their  exposition,  the  good  sense  of  man- 
kind has  at  length  settled  down  to  this,  that 
they  were  intended  to  secure  the  individual 
from  the  arbitrary  exercise  of  the  powers  of 
government,  unrestrained  by  the  established 
principles  of  private  rights  and  distribution 
of  justice.” 

The  advance  made  in  this  country  over  that  of 
Great  Britain  in  construing  the  limitation  placed 
by  “law  of  the  land”  upon  constituted  authority 
is  discussed  in  Hurtado  vs.  California,  110  U.  8., 
at  page  531,  where  Matthews,  J.,  says: 

“The  concessions  of  Magna  Charter  were 
wrung  from  the  King  as  guarantees  against 
the  oppressions  and  usurpations  of  his  pre- 
rogative. It  did  not  enter  into  the  minds  of 
the  barons  to  provide  security  against  their 
own  body,  or  in  favor  of  the  Commons  by 
limiting  the  power  of  Parliament;  so  that 
hills  of  attainder,  ex  post  facto  laws,  laws 
declaring  forfeitures  of  estates  and  other 
arbitrary  acts  of  legislation,  which  occur  so 
frefjuently  in  English  history,  were  never  ixh 
garded  as  inconsistent  with  the  law  of  the 
land;  for  notwithstanding  what  was  at- 
tributed to  Lord  Coke  in  Ponham’s  ease,  H 
Rep.,  115,  118,  a the  onini|)otence  of  Parlia- 
ment over  the  Common  Law  was  absolute, 
even  against  connnf)n  right  and  reason.  4’lie 


98 


actual  and  practical  security  for  English  lil)- 
erty  against  legislative  tyranny  was  the 
power  of  a free  public  opinion  represented 
by  the  Commons. 

‘ ‘ In  this  country  written  constitutions  were 
deemed  essential  to  protect  the  rights  and 
liberties  of  the  people  against  the  encroach- 
ments of  power  delegated  to  their  govern- 
ments, and  the  provisions  of  Magna  Charta 
were  incorporated  into  Bills  of  Rights.  They 
were  limitations  upon  all  the  powers  of  gov- 
ernment, legislative  as  well  as  executive  and 
judicial. 

“It  necessarily  happened,  therefore,  that 
as  these  broad  and  general  maxims  of  lil)erty 
and  justice  held  in  our  system  a different 
I)lace  and  performed  a different  function 
from  their  position  and  office  in  English  Con- 
stitutional History  and  Law,  they  would  re- 
ceive and  justify  a corresponding  and  more 
comprehensive  interpi'etation.  Applied  in 
England  only  as  guards  against  executive 
usurpation  and  tyranny,  here  they  have  be- 
come bulwarks  also  against  arbitrary  legisla- 
tion; but  in  that  application  as  it  would  be 
incongruous  to  measure  and  restrict  them  by 
the  ancient  Customary  English  law,  they 
must  be  held  to  guarantee  not  particular 
forms  of  procedure,  Imt  the  very  sul)stance 
of  individual  rights  to  life,  liberty  aud  prop- 
erty. ’ ’ 


The  meaning  of  “law  of  the  land”  was  dis- 
cussed l)y  Bronson,  J.,  in  the  Matter  of  John  and 
Cherry  Street,  19  Wendell,  (157,  where  he  held  the 
xVct  of  1818  transferring  to  the  corporation  title 
to  the  land  from  which  parts  of  the  old  street  had 
been  withdrawn  unconstitutional,  saying,  in  the 
course  of  his  opinion,  after  citing  Matter  of  Al- 
bany Street,  11  Wend.,  149: 


99 


“ ‘ * * * and  such  I think  is  still  more 

clearly  the  meaning  when  that  danse  is  con- 
sidered in  connection  with  the  preceding  one, 
inhibiting  a deprivation  of  property  without 
due  process  of  law.’  This  danse  is  an  en- 
largement and  extension  of  the  words  of 
^lagna  Charta,  ch.  29:  ‘Xo  freeman  shall 
be  disseized  of  his  freehold  but  by  the  law  of 
the  land.’  Those  words  ‘by  the  law  of  the 
land,’  as  said  by  Coke  (2  Inst.,  50),  are  prop- 
erly rendered  ‘due  process  of  law’;  among 
which  he  mentions  the  writ  original  at  the 
common  law,  the  ordinary  mode  of  commenc- 
ing a suit  to  tix'  the  title;  &c.’  ” 

Taylor  vs.  Porter,  4 Hill,  144. 

In  this  case  it  was  held  that  a statute  authoriz- 
ing a private  road  to  be  laid  out  over  the  lands  of 
a person  without  his  consent  was  unconstitutional 
and  void. 

In  this  case,  we  have  a judicial  construction  of 
the  provision  in  the  later  constitutions  of  the 
State  above  referred  to,  where  the  language  used 
is  almost  word  for  word  the  same  as  Section  Xlll. 
of  the  Constitution  of  1777. 

Bronson,  J.,  in  the  course  of  Ids  opinion,  said: 

“Under  our  form  of  government  the  legis- 
lature is  not  supreme.  It  is  only  one  of  llie 
organs  of  that  al)Solule  sovereignty  which  i-e- 
sides  in  the  whole  body  of  the  peo[)le.  Like 
other  departments  of  the  governnnmt,  it  eaii 
ordy  exercise  sneh  powers  as  have  l)een  dele- 
gated to  it;  and  when  it  steps  beyond  tliat 
boundary,  its  acts,  like  those  of  the  most 
humble  magistrate  in  the  State  who  ti-an- 
scends  his  jurisfliction,  are  utterly  void.’’ 

Again,  at  page  145: 

“But  the  question  does  not  necessarily 


100 


turn  on  the  section  granting  legislative 
power.  The  people  have  added  negative 
words,  which  should  put  the  matter  at  rest. 
‘No  member  of  this  State  shall  be  disfran- 
chised, or  deprived  of  any  of  the  rights  or 
privileges  secured  to  any  citizen  thereof,  nn- 
less  hy  the  law  of  the  land,  or  the  judgment  of 
his  peers.’  (Const.,  Art.  7,  Section  1.)  The 
words  ‘by  the  law  of  the  land’  as  here  used, 
do  not  mean  a statute  passed  for  the  purpose 
of  working  the  wrong.  That  construction 
would  render  the  restriction  absolutely  nuga- 
tory, and  turn  this  part  of  the  constitution 
into  mere  nonsense. 

“The  people  would  be  made  to  say  to  the 
two  houses,  ‘You  shall  he  vested  with  the 
legislative  power  of  the  state;’  hut  no  one 
‘shall  he  disfranchised  or  deprived  of  any  of 
the  rights  or  privileges’  of  a citizen,  unless 
you  pass  a statute  for  that  purpose;  in  other 
words,  ‘You  shall  not  do  the  wrong  unless 
yon  choose  to  do  it.’  The  section  was  taken 
with  some  modifications  from  a part  of  the 
29th  Chapter  of  Magna  Charta,  which  pro- 
vided, that  no  freeman  should  he  taken  or 
imprisoned,  or  he  disseized  of  his  freehold, 
etc.,  hut  by  lawful  judgment  of  his  peers,  or 
hy  the  law  of  the  land.  Lord  Coke,  in  his 
commentary  upon  this  statute,  says,  that 
these  words  ‘by  the  law  of  land’  mean 
‘hy  the  dne  course  and  process  of  law,’ 
which  he  afterwards  explains  to  he,  ‘l)y  in- 
dictment or  presentment  of  good  and  lawful 
men,  where  such  deeds  lie  done  in  dne  manner, 
or  hy  writ  original  of  the  Common  Law’  (2 
Inst.,  45,  50).  In  North  Carolina  and  Tennes- 
see, where  they  have  copied  almost  literally 
this  part  of  the  29th  Chapter  of  Afagna  Char- 
ta, the  terms  ‘law  of  the  land’  have  received 
the  same  constrnction.  (Citing  authorities.) 
The  meaning  of  tlie  section  then  seems  to  lie 


101 


that  no  member  of  the  state  shall  be  disfran- 
chised, or  deprived  of  any  of  his  rights  or 
privileges,  unless  the  matter  shall  be  adjudged 
against  him  upon  trial  had  according  to  the 
course  of  the  Common  Law.  It  must  be  ascer- 
tained judicially  that  he  has  forfeited  his 
I)rivileges,  or  that  some  one  else  has  a su- 
perior title  to  the  ijroperty  he  possesses  be- 
fore either  of  them  can  be  taken  from  him. 
It  cannot  be  done  by  mere  legislation.” 

The  opinion  then  goes  on  to  discuss  the  prohi- 
bitions contained  in  other  clauses  of  the  Constitu- 
tion. 

Green  vs.  Shumway,  39  N.  Y.,  426. 

In  this  case,  we  have  again  a judicial  construc- 
tion of  Section  1 of  Article  1 of  the  Constitution 
of  1846,  which,  as  seen  above,  is  almost  word  for 
word  from  the  Constitution  of  1777. 

The  question  related  to  the  validity  of  the 
statute  reciuiring  the  taking  of  an  oath  by  electors 
of  delegates  to  a constitutional  convention. 

The  Court  said,  in  the  course  of  its  opinion : 

“The  statute  also  violates  Section  1 of 
Article  1 of  the  Constitution  of  this  State, 
whicli  declares  that  ‘no  member  of  this  State 
shall  be  disfranchised  or  deprived  of  any  of 
the  right  or  privileges  secured  to  anj'  citizens 
thereof,  unless  by  the  law  of  the  land  or  the 
judgment  of  his  peers.’  The  ‘law  of  tin?  land’ 
does  not  mean  a statute  passed  for  the  j)ur- 
jjose  of  working  the  wrong;  but  the  law  wliieh 
e.xisted  at  the  time  when  the  alleged  offense 
was  perpetrated.  The  provision  was  intendecl 
to  restrict  the  powers  of  the  legislature  and 
to  prevent  any  act  which  wouhl  deprive  a 
party  of  bis  rights  or  disfranchise  him  until 


102 


it  was  ascertained  judicially  that  they  had 
been  forfeited.  (Citing  authorities.)  The 
act  in  question  pronounces  a judgment  and 
disfranchises  the  electors  without  judge  or 
jury  or  any  of  the  forms  required  hy  the 
ordinary  course  of  legal  proceedings.” 

White  vs.  White,  5 Barbour,  474. 

In  this  case  Section  1 of  Article  1 of  the  Con- 
stitution of  1846  again  received  judicial  construc- 
tion. 

Held  that  the  Act  of  April  7th,  1848,  for  the 
more  effectual  protection  of  the  property  of  mar- 
ried women,  so  far  as  it  relates  to  existing  rights 
of  property  in  married  persons,  was  unconstitu- 
tional and  void. 

Mason,  J.,  in  the  course  of  his  opinion,  said : 

“This  Section  1 of  Article  1 of  the  present 
constitution  is  but  a copy  of  Section  1 of 
Article  7 of  the  former  constitution  of  the 
state,  and  has  received  judicial  construction. 
The  question  arose  in  the  case  of  Taylor  vs. 
Porter  and  Ford  (4  Hill,  140),  as  to  the  valid- 
ity of  a general  statute  of  the  state  authoriz- 
ing private  roads  to  be  laid  out  over  the  lands 
of  others,  for  the  use  of  the  applicant,  his 
heirs  and  assigns,  and  the  act  of  the  legisla- 
ture was  adjudged  to  he  unconstitutional,  as 
coming  in  conflict  with  this  section  of  the  con- 
stitution. We  must,  therefore,  regard  this 
section  of  the  Constitution  as  having  received 
judicial  construction.” 

Bowe  vs.  United  States  Eeflector  Com- 
])any,  86  Hun,  407. 

Action  to  obtain  a judgment  declaring  the  plain- 
tiff, as  late  sheriff,  to  hav('  a li(‘n  on  (*ertain  ])er- 
sonal  property. 


1C3 


Daniels,  J.,  in  the  course  of  liis  opinion,  said : 

“Upon  this  subject  care  has  been -taken  to 
preserve  and  protect  the  rights  of  the  owners 
of  property  against  interference  of  this  de- 
scription, even  though  that  may  have  been 
provided  for  by  an  act  of  the  legislature.  To 
prevent  such  interference  it  has  been  declared 
that:  ‘No  member  of  this  state  shall  be  dis- 
franchised or  deprived  of  any  of  the  rights 
or  privileges  secured  to  the  citizens  thereof 
unless  by  the  law  of  the  land  or  the  judgment 
of  his  peers.’  ‘Nor  be  deprived  of  life,  lib- 
erty or  property  without  due  process  of  law,’ 
and  these  provisions  have  been  so  construed 
as  to  maintain  the  rights  of  property  against 
mere  legislative  interference,  and  as  requiring 
a legal  proceeding  following  other  ordinary 
forms  of  law  and  resulting  in  a judgment  upon 
some  obligation  or  contract  or  liability  in- 
curred by  the  party  proceeded  against,  liefore 
he  can  be  divested  of  his  property,  and  it  can 
be  applied  to  the  uses  of  another  party.  They 
protect  the  owner  against  the  taking  of  his 
property  by  color  of  legislative  authority,  to 
bestow  it  upon  or  give  or  devote  it  to  the 
uses  of  another  person.  This  was  generally 
considered  in  Xpav  York  £ Oswego  R.  R.  Co. 
vs.  Van  Horne  (b7  N.  Y.,  473).  Ami  it  was 
held  by  the  Court  that  the  Tjcgislature  never 
can  take  the  property  of  one  individuai  with- 
out his  consent  and  give  it  to  another,  ami 
this  salutaiw  general  principle  has  also  been 
maintained  in  Eni})ury  vs.  Connor  (3  Comst., 
511-517);  Taylor  vs.  Porier  (4  Hill,  141); 
Weismer  vs.  Donylas  (54  N.  Y.,  01,  105).” 

Westervelt  vs.  Cregg,  ll2  N.  Y.,  202. 

Question  relat(*d  to  the  right  of  a husband  to  a 
legacy  to  his  wife  not  vested  in  possession  at  tlie 
time  of  the  taking  effect  of  tlie  Act  of  1H48. 


104 


The  clause  of  the  Constitution  discussed  was 
that:  “No  person  should  be  deprived  of  life, 
liberty  or  property  without  due  process  of  lawC’ 

Denio,  J.,  in  the  course  of  his  concurring 
opinion,  said : 

“The  act  does  not  fall  within  the  meaning 
of  due  process  of  law.  That  tenn  according 
to  Lord  Coke  means  being  brought  in  to 
answer,  according  to  the  ‘old  law  of  the  land’ 
(2  Inst.,  50;  and  see  also  Taylor  vs.  Porter, 
4 Hill,  140,  and  cases  cited  hy  Bronson,  J.,  2 
Kent’s  Com.,  13). 

‘ ‘ The  provision  was  designed  to  protect  the 
citizen  against  all  mere  acts  of  power,  whether 
flowing  from  the  legislative  or  executive 
branches  of  government.  It  does  not,  of 
course,  touch  the  right  of  the  state  to  appro- 
priate private  property  to  public  use  upon 
making  due  compensation,  which  is  fully  rec- 
ognized in  another  part  of  the  constitution; 
hut  no  power  in  the  state  can  legally  confer 
upon  one  person  or  class  of  persons  the  prop- 
erty of  another  person  or  class,  wdthout  their 
consent,  whatever  motives  of  policy  may  exist 
in  favor  of  such  transfer.” 

Forster  vs.  Scott,  136  N.  Y.,  at  p.  583. 

Action  for  specific  performance  under  contract 
of  sale.  The  encumbrance  on  account  of  which 
title  was  rejected  was  a map  filed  pursuant  to 
Chapter  681  of  the  Laws  of  1886  by  City  of  New 
York,  entirely  covering  plaintiff’s  lot,  no  action 
to  acquire  title  having  been  taken.  The  act  pro- 
vided that  no  compensation  should  he  allowed  for 
any  building  erected  su])sequent  to  the  filing  of 
the  map. 

O’Brien,  J.,  in  the  course  of  his  o])inion  dis- 


105 


cussing  the  provisions  against  erections  subse- 
quent to  the  filing  of  the  map,  said : 

“This  statute  is  of  somewhat  ancient  origin 
and  it  was  said  in  some  of  the  cases  that  it 
was  at  first  enacted  at  the  solicitation  of  the 
lando'^^^lers  in  order  to  enhance  the  value  of 
their  property.  {In  re  Furman  Street,  17 
Wend.,  658;  in  re  Wall  Street,  17  Barb.,  639; 
Seaman  vs.  Hicks,  8 Paige,  660). 

“However  that  may  be  in  the  aspect  in 
which  the  question  is  now  presented,  we  think 
it  is  in  conflict  with  the  provisions  of  the  Con- 
stitution for  the  protection  and  security  of 
private  property.  The  constitutional  guaran- 
tee against  the  appropriation  of  private  prop- 
erty for  public  use,  except  upon  just  com- 
pensation, as  well  as  that  against  depriving 
the  owner  of  its  enjoyment  and  possession 
without  due  process  of  law,  have  been  the 
subject  of  much  judicial  discussion  in  the 
manifold  aspects  in  which  the  questions  have 
been  presented  in  the  numerous  cases.  These 
provisions  have  been  so  thoroughly  ex- 
pounded, and  their  application,  meaning  and 
practical  scope  so  minutely  explained  that  it 
would  be  very  difficult  to  suggest  now  any 
views  which  could  be  called  new,  and  a re- 
statement of  propositions,  so  often  before 
sanctioned  by  courts  and  judicial  writers,  is 
quite  needless.  This  case  is  governed  by  a 
few  principles  so  well  settled  and  understood, 
that  they  are  elementary,  and  imthing  can  be 
added  to  their  force  or  application  by  illus- 
tration or  extended  discussion.  The  validity 
of  a law  is  to  be  determined  by  its  purpos(‘ 
and  its  reasonable  aiul  practieal  effect  and 
operation  though  enacted  under  the  guise  of 
some  general  power,  which  the  l(‘gislature 
may  lawfully  exercise,  but  which  may  be  and 
frequently  is  userl  in  such  a maimer  as  to  eii 


106 


croach,  by  design  or  otherwise,  upon  the  posi- 
tive restraints  of  the  Constitution.  What 
the  legislature  cannot  do  directly  it  cannot 
do  indirectly,  as  the  Constitution  guards  as 
effectually  against  insidious  approaches  as 
an  open  and  direct  attack.  When  a law  de- 
prives the  owner  of  the  beneficial  use  and 
free  enjoyment  of  his  property,  or  imposes 
restraints  upon  such  use  and  enjoyment,  that 
materially  affect  its  value,  without  legal 
process  or  compensation,  it  deprives  him  of 
his  property  within  the  meaning  the  Constitu- 
tion. All  that  is  beneficial  in  property  arises 
from  its  use  and  the  fruits  of  that  use,  and 
whatever  deprives  a person  of  them  deprives 
him  of  all  that  is  desirable  or  valuable  in  the 
title  and  possession.  It  is  not  necessary,  in 
order  to  render  a statute  obnoxious  to  the 
restraints  of  the  Constitution  that  it  must  in 
terms  or  in  effect  authorize  an  actual  physical 
taking  of  the  property  or  the  thing  itself,  so 
long  as  it  affects  its  free  use  and  enjoyment, 
or  the  power  of  disposition  at  the  will  of  the 
owner.  ’ ’ 

The  above  case  has  been  followed  in  Matter  of 
Mayor,  24  App.  Div.,  7;  German  Real  Estate  Co. 
vs.  Myers,  32  App.  Div.,  41;  Sinyer  vs.  Mayor,  47 
App.  Div.,  42;  N.  T.  C.  II.  R.  R.  Co.  vs.  Ilaffen, 
DU  Him,  260;  In  Matter  of  City  of  New  York,  196 
N.  Y.,  255. 

In  the  last  case  cited  the  principle  of  Forster  vs. 
Scott  was  approved ; but  the  Court  held  that  good 
faith  should  be  exercised  l)y  the  parties  affected 
by  the  intervening  time  during  the  pendency  of 
the  street  o])ening  proceedings  and  where  a build- 
ing had  been  planted  upon  i)remises  to  be  taken, 
for  the  sole  i)ur])ose  of  increasing  the  damages, 
such  a building  slionld  be  treated  as  personal 
property. 


107 


Chicago,  etc.,  R.  R.  Co.  vs.  Chicago,  166 
U.  S.,  226. 

In  a proceeding  to  condemn  certain  property  of 
the  Railroad  Company  the  sum  of  one  dollar  was 
fixed  as  just  compensation  for  the  })roperty  taken. 
The  contention  of  the  Railroad  Com])any  was  that 
it  had  been  deprived  of  its  i)roperty  without  due 
process  of  law  contrary  to  the  prohibitions  of  the 
14th  Amendment. 

In  this  particular  case  it  was  held  that  the  award 
was  not  improper  on  the  ground  that  a railroad 
having  laid  its  tracks  within  the  limits  of  the 
city  must  be  deemed  to  have  done  so  sul)ject  to 
the  condition — not,  it  is  true,  expressed,  but  neces- 
sarily  implied — that  new  streets  of  the  city  might 
be  opened  and  extended  from  time  to  time  across 
its  tracks  as  the  public  convenience  required,  and 
under  such  restrictions  as  might  be  prescribed 
by  statute. 

Harlan,  J.,  in  his  opinion  discussed  fully  the 
question  whether  “due  process  of  law”  requires 
compensation,  holding  that  it  did,  saying  in  the 
course  of  his  opinion  : 

“It  is  proper  now  to  inquire  whether  the 
due  process  of  law  enjoined  by  the  Four- 
teenth Amendment  recpiires  compensation  to 
be  made  or  adef|uately  secured  to  the  owner 
of  private  property  taken  for  [)ublic  use  under 
the  authority  of  a State. 

“In  Davidson  vs.  Neiv  Orleans,  above  cited, 
it  was  said  that  a statute  declaring  in  terms, 
without  more,  that  the  fidl  and  exclusive  title 
to  a described  piece  of  land  belonging  to  om; 
j)erson  should  be  and  is  hereby  vested  in 
another  person,  would,  if  efTeetual,  deprive* 
the  former  of  bis  j)ro[)erty  wit  bout  dm; 
process  of  law,  within  the  meaning  of  tin* 


108 


Fonrteentli  Amendment.  See  also,  Missouri 
Pacific  Railway  vs.  Nehraska,  164  U.  S.,  403, 
417.  Snell  an  enactment  wonld  not  receive 
judicial  sanction  in  any  country  having  a writ- 
ten constitution  distributing  the  powers  of 
government  among  three  co-ordinate  depart- 
ments, and  committing  to  the  judiciary,  ex- 
pressly or  by  implication,  authority  to  en- 
force the  provisions  of  such  constitution.  It 
would  he  treated  not  as  an  exertion  of  legis- 
lative power  but  as  a sentence — an  act — of 
s])oliation.  Due  ])rotection  of  the  rights  of 
property  has  been  regarded  as  a vital  prin- 
ciple of  republican  institutions.  ‘Next  in  de- 
gree to  the  right  of  personal  liberty,’  Mr. 
Broom,  in  his  work  on  Constitutional  Law, 
says,  ‘is  that  of  enjoying  private  property 
without  undue  interference  or  molestation’  (p. 
228).  The  requirement  that  the  property  shall 
not  be  taken  for  i)ublic  use  without  just  com- 
l)ensation  is  but  ‘an  affirmance  of  a great  doc- 
trine established  by  the  common  law  for  the 
l)rotection  of  private  property.  It  is  founded 
in  natural  equity,  and  is  laid  down  by  jurists 
as  a principle  of  universal  law.  Indeed,  in  a 
free  government  almost  all  other  rights 
would  become  worthless  if  the  government 
possessed  an  uncontrollable  power  over  the 
private  fortune  of  every  citizen.’  2 Story 
Const.,  § 1790 ; 1 Bl.  Com.,  138,  139 ; Cooley’s 
Const.  Lim.,  559;  People  vs.  Platt,  17  Johns., 
195,  215;  Bradshaw  vs.  Dodgers,  20  Johns., 
103,  106;  Petition  of  Mt.  'Washington  Road 
Co.,  35  N.  IL,  134,  142;  Parham  vs.  The  Jus- 
tices, etc.,  9 Georgia,  341,  348;  Martin  et  al., 
Ex  parte  13  Arkansas,  198,  206  et  seq.;  John- 
son vs.  Rankin,  70  N.  C.,  550,  555. 

“But  if,  as  tliis  court  has  adjudged  a legis- 
lative enactment  assuming  aiLitrarily  to  take 
the  property  of  one  individual  and  give  it  to 


109 


another  individual,  would  not  he  due  process 
of  law  as  enjoined  by  the  Fourteenth  Amend- 
ment, it  must  be  that  the  requirement  of  due 
process  of  law  in  that  amendment  is  applica- 
ble to  the  direct  appropriation  by  the  State 
to  public  use  and  without  compensation  of  the 
y)rivate  property  of  the  citizen.  The  lei?isla- 
ture  may  prescribe  a form  of  y)rocedure  to  be 
observed  in  the  taking  of  private  property 
for  public  use,  but  it  is  not  due  process  of  law 
if  provision  be  not  made  for  com])ensation. 
Notice  to  the  owner  to  appear  in  some  judicial 
tribunal  and  show  cause  why  his  property 
shall  not  be  taken  for  public  use  without  com- 
pensation would  be  a mockerj'  of  justice.  Due 
process  of  law  as  applied  to  judicial  proceed- 
ings instituted  for  the  taking  of  private  prop- 
erty for  public  use  means,  therefore,  such 
process  as  recognizes  the  rigl^t  of  the  owner 
to  be  compensated  if  his  property  be  wrested 
from  him  and  transferred  to  the  public.  The 
mere  form  of  the  proceeding  instituted 
against  the  owner,  even  if  he  be  admitted  to 
defend,  cannot  convert  the  process  used  ijito 
due  process  of  law,  if  the  necessary  result 
be  to  deprive  him  of  his  property  without 
compensation.  ” 

Tho  Justice  then  proceeds  to  cite  Fletcher  vs. 
Peck,  G Cranch,  87 ; Loan  Associatioji  vs.  Topeka, 
20  Wall,  055;  Gardnei-  vs.  Xewbui-gh,  2 Jolms 
Ch.,  102;  Sinnickson  vs.  Johnson,  17  X.  J.  L.,  129; 
Searl  vs.  School  District,  155  F.  S.,  555;  Scotf  vs. 
Toledo,  50  Fed.  Kep.,  585;  Mount  Hope*  (cemetery 
vs.  Boston,  158  Mass.,  509,  and  then  said: 

“In  his  work  on  Constitutional  Limitations, 
Mr.  Cooley  says:  ‘The  f)rinci})les,  then,  uiiori 
which  the  process  is  based  are  to  determine 
whether  it  is  ‘due  process’  or  Jiot,  and  not  any 


110 


considerations  of  mere  form  * * * When 
the  government,  throngh  its  established 
agencies,  interferes  with  tlie  title  to  one’s 
property,  or  with  his  independent  enjoyment 
of  it,  and  its  action  is  called  in  question  as  not 
in  accordance  with  the  law  of  the  land,  we  are 
to  test  its  validity  by  those  principles  of  civil 
lil)erty  and  constitutional  protection  which 
have  become  established  in  our  system  of 
laws,  and  not  generally  by  rules  that  pertain 
to  forms  of  procedures  merely.  In  judicial 
proceedings  the  law  of  the  land  requires  a 
hearing  before  condemnation,  and  judgment 
before  dispossession;  but  when  property  is 
appropriated  by  the  government  to  public 
uses,  or  the  legislature  interferes  to  give  di- 
rection to  its  title  through  remedial  statutes, 
different  considerations  from  those  which  re- 
gard the  controversies  l)etween  man  and  man 
must  prev'hil,  different  proceedings  are  re- 
quired, and  we  have  only  to  see  whether  the 
interference  can  be  justified  by  the  estal)lished 
rules  applicable  to  the  special  case.  Due 
process  of  law  in  each  particular  case  means 
such  an  exertion  of  the  powers  of  government 
as  the  settled  maxims  of  law  permit  and  sanc- 
tion, and  under  such  safeguards  for  the  pro- 
tection of  individual  rights,  as  those  maxims 
])rescribe  for  the  class  of  cases  to  which  the 
one  in  question  belongs.  * * * Jjj  every 
government  there  is  inherent  authority  to 
ai)])ro])riate  the  i)ro])erty  of  the  citizen  for  the 
necessities  of  the  State,  and  comstitutional 
provisions  do  not  confer  the  power,  though 
they  generally  surround  it  with  safeguards 
to  prevent  abuse.  The  restraints  are,  that 
when  si)e(‘ific  ])ro])erty  is  taken,  a pecuniary 
com))ensation,  agreed  u))on  or  det(‘rniined  bv 
judicial  inquiry,  must  l)e  ])aid  (pp.  *356, 
*357).  In  his  discussion  as  to  tin*  meaning 


Ill 


and  scope  of  the  Fourteenth  Amendment  the 
same  Nvriter  in  his  edition  of  Story  on  the 
Constitution,  after  observing  that  every 
species  of  individual  property  was  subject  to 
be  appropriated  for  the  special  needs  of 
either  the  State  or  national  government,  l)ut 
that  the  power  to  appropriate  was  subject  to 
the  restriction,  among  others,  that  it  must  not 
be  exercised  without  making  due  compensa- 
tion for  whatever  is  taken,  says : Due  process 
of  law  requires,  first,  the  legislative  act 
authorizing  the  appropriation,  pointing  out 
how  it  may  be  made  and  how  the  compensa- 
tion shall  be  assessed;  and,  second,  that  the 
parties  or  officers  proceeding  to  make  the 
appropriation  shall  keep  within  the  authority 
conferred,  and  observe  every  regulation 
which  the  act  makes  for  the  protection  or  in 
the  interest  of  the  property  owner,  except  as 
he  may  see  fit  voluntarily  to  waive  them  (2 
Stor>'  Const.,  § 1956). 

“In  our  opinion,  a judgment  of  a state 
court,  even  if  it  be  authorized  l)y  statute, 
whereby  private  property  is  taken  for  the 
State  or  under  its  direction  for  public  use, 
without  compensation  made  or  secured  to  the 
owner,  is,  upon  principle  and  authority,  want- 
ing in  the  due  process  of  law  required  by  the 
Fourteenth  Amendment  of  the  Constitution 
of  the  United  States,  and  the  affirmance  of 
such  judgment  by  the  highest  court  of  the 
State  is  a denial  by  that  State  of  a right 
secured  to  the  owner  by  that  instrument.” 

Gardner,  vs.  Village  of  Newburgh,  2 
Johns.,  Ch.,  164. 

An  act  of  the  legislature  authorized  the  trustees 
of  a village  to  supply  it  with  water  by  means  of 
conduits,  etc.,  but  made  no  provision  foi'  indemni- 
fying the  owners  of  lands  through  which  the 


112 


stream  flowed.  Held  an  injunction  should  be 
granted. 

Kent,  Chancellor,  in  the  course  of  his  opinion, 
said : 


“I  have  intimated  that  the  statute  does  not 
deprive  the  plaintiff  of  the  use  of  the  stream, 
until  recompense  be  made.  He  would  be  en- 
titled to  his  action  at  law  for  the  interruption 
of  his  right,  and  all  his  remedies  at  law,  and 
in  this  court  remain  equally  in  force.  But  I 
am  not  to  be  understood  as  denying  a com- 
petent power  in  the  legislature  to  take  private 
property  for  necessary  or  useful  purposes; 
and  perhaps  even  for  the  purpose  specified 
in  the  acts  on  which  this  case  arises.  But  to 
render  the  exercise  of  the  power  valid,  a fair 
compensation  must,  in  all  cases,  be  previously 
made  to  the  individuals  affected,  under  some 
equitable  assessment  to  be  provided  by  law. 
This  is  a necessary  qualification  accompany- 
ing the  exercise  of  legislative  powers,  in 
taking  private  property  for  public  uses;  the 
limitation  is  admitted  by  the  soundest  author- 
ities and  is  adopted  by  all  temperate  and 
civilized  governments,  from  a deep  and  uni- 
versal sense  of  its  justice.” 

Further  in  the  course  of  his  opinion  he  quotes 
tlie  provision  of  the  United  States  Constitution: 
“that  private  ])roperty  shall  not  be  taken  for  pub- 
lic use,  without  just  compensation”  as  l)inding 
upon  him. 

It  is  now  settled  by  authority,  however,  that 
the  first  ten  amendments  of  the  Constitution,  in 
one  of  which  was  the  clause  in  question,  were 
limitations  upon  the  powers  of  the  Federal  Cov- 
ernment  rather  than  upon  the  State  Governments. 


113 


See  Jackson  ex  dem  Wood  vs.  Wood,  2 
Cowen,  819. 

Spies  vs.  Illinois,  123  U.  S.,  131,  166. 

Bradshaw  vs.  Rogers,  20  Johns.,  103. 

Action  for  trespass  in  relation  to  entry  upon 
lands  in  connection  with  construction  of  canal 
under  Act  of  1817. 

Spencer,  Ch.  J.,  said  in  the  course  of  his 
ojhnion : 

“If  we  could  surmount  this  difficulty,  a 
more  serious  one  presents  itself.  The  act 
under  consideration  contains  no  provision  to 
compensate,  at  any  time,  those  whose  lands 
may  he  taken  as  a substitute  for  a public  road 
or  highway,  altered  or  discontinued  by  Ibc 
principal  engineer  for  the  damages  they  sus- 
tain. This  is  directly  opposed  to  tie  fifth 
article  of  the  Amendments  of  the  Constitu- 
tion of  tlie  United  States,  which  forbids  the 
taking  of  property  for  public  use  without  just 
compensation.  The  same  inhibition  to  tlie 
power  of  the  legislature  is  contained  in  the 
late  amendments  to  the  Constitution  of  thii 
state.  I do  not  rely  on  either  as  having  a 
binding  constitutional  force  upon  the  act 
under  consideration.  Tlie  former  related  to 
the  powers  of  the  national  government,  arnl 
was  intended  as  a restraint  on  that  govern- 
ment; and  the  latter  is  not  yet  operative.  But 
they  are  both  declaratory  of  a great  and  fund- 
amental principle  of  government;  and  any 
law  violating  that  principle  must  be  di'emerl 
a nullity,  as  it  is  against  natural  right  and 
justice.  This  all-imjiortant  and  essential 
Itrinciple  was  somewliat  illnstrat(‘<l.  in  tlm 
case  of  The  People  vs.  Platt  (17  .lolins  Re))., 
215).’’ 


Bradshaw  vs.  Rogers  was  reversed  in  20  Johns., 
735,  but  the  Court  said  upon  the  question  of  com- 
pensation, p.  745: 

“This  equitable  and  constitutional  title  to 
compensation,  undoubtedly,  imposes  it  as  an 
absolute  duty  upon  the  legislature  to  make 
provision  for  compensation  whenever  they 
authorize  an  interference  with  private  rights. 
Perhaps,  in  certain  cases,  the  exercise  of  the 
power  might  be  judicially  restrained,  until 
an  opportunity  was  given  to  the  party  in- 
jured to  seek  and  obtain  the  compensation. 
But  it  would  deserve  a very  grave  considera- 
tion before  we  undertook  to  lay  down  the 
broad  proposition,  that  notwithstanding  a 
statute  clearly  and  expressly  directed  the  as- 
sumption of  private  property  for  a necessary 
public  object,  it  would  still  be  a nullity,  and 
the  officer  who  undertook  to  execute  it  a tres- 
passer, if  a provision  for  compensation  did 
not  constitute  part  and  parcel  of  the  act  itself. 
However,  it  is  not  necessary  to  give  any 
opinion  on  this  point,  for,  as  I have  already 
observed,  the  provision  for  compensation  in 
the  Act  of  1817  extended  to  cases  arising 
under  the  Act  of  1820.” 

Coming  to  the  cases  relied  on  by  defendants : 

Matter  of  127th  Street,  56  Howard’s 
Practice,  60. 

Held  that  the  provision  of  the  act  of  1813, 
prohibiting  the  commissioners  from  making  allow- 
ance for  liuildings  erected  sul)se(iuent  to  the  filing 
of  the  map  was  not  unconstitutional. 

The  ground  for  the  decision  a])i)ears  to  be  as 
stated  at  i)age  64: 

“The  land  devoted  to  the  street  did  remain 
in  the  owner  until  it  was  actually  appro- 


115 


priated  by  legal  proceedings  to  the  use  of  the 
public  as  a street  and  ])roper  compeusatiou 
was  provided  for  it.  But  before  that  it  had 
been  affected  l)y  a valid  law  at  the  time  when 
it  was  enacted,  depriving  the  owner  of  com- 
pensation for  buildings  afterwards  placed 
upon  it.  At  that  time  the  legislative  author- 
ity was  unrestricted  and  undoubted  in  this 
respect,  and  the  act  was  within  the  acknowl- 
edged and  proper  scope  of  legislative  author- 
ity; and  it  was  enacted  to  meet  what  was 
then  believed  to  be  the  wants  and  to  provide 
for  the  protection  of  the  public  interests  in 
what  it  was  then  believed  would  soon  become 
a large  and  important  commercial  city.  Its 
object  was  to  make  suitable  provisions  for  its 
future  enlargement  and  expansion;  and  the 
policy  of  it,  while  it  was  not  prejudicial  to 
the  property  owners,  was  not  unreasonably 
generous  to  the  pul)lic.  It  declared  and  de- 
fined the  prospective  rights  and  interests  of 
both ; for  it  defined  the  property  which  the 
owners  could  securely  improve,  and  that 
which  the  public  should  afterwards  use.  The 
future  rights  of  both  were  at  once  estahlislu'd, 
and  its  policy  became  interwoven  with  the 
future  growth  of  the  city.  It  took  effect  at 
once,  and  to  that  extent,  and  when  there  was 
no  obstacle  in  the  way  of  its  enactment,  it 
affected  the  property  subject  to  its  [U'ovisioiis. 
'I'o  that  extent  it  became  an  executed  law 
when  no  constitutional  impediment  whatevei- 
could  be  snpfiosed  to  stand  in  its  way.” 

Matter  of  Furman  St.,  17  M'endell,  fiol. 

Street  i)rocee<lings  to  op<,*n  a street  in  IH.'kj  laid 
out  a map  of  commissioners  made  in  IHlt),  pur- 
suant to  the  charter  of  the  \'illage  of  Biooklyn  <*f 
1810,  and  question  upon  this  apjKuil  i-elatcd 


116 


auiong  others  to  the  refusal  of  the  Commissioners 
to  allow  damages  for  structures  erected  subse- 
quently to  the  filing  of  the  map. 

Upon  the  question  of  the  constitutionality  of 
the  act,  the  Court  said  that  the  prohibition  upon 
taking  property  for  public  use  without  compensa- 
tion was  not  contained  in  the  constitution  at  the 
time  the  act  was  passed,  and  if  the  land  was  in 
fact  appropriated  in  1819,  there  was  nothing  in 
the  constitution  to  forbid  such  a course. 

I’he  Court  further  said  (p.  659)  : 

“But  waiving  this  consideration,  the  right 
to  take  private  property  for  public  use  is  not 
conferred  l.)y  the  Constitution.  It  is  a right 
inseparably  connected  with  the  sovereign 
power  of  the  state  in  whatever  hands  that 
power  may  reside;  and  the  Constitution  has 
only  regulated  its  exercise,  by  requiring  that 
just  compensation  be  made  to  the  owner.  At 
what  time  and  in  what  particular  manner  the 
owner  shall  receive  his  recompense,  rests  in 
the  discretion  of  the  legislature,  with  uo  other 
limitation  or  restriction  than  that  it  shall  be 
just  compensation.  There  is  nothing  in  the 
constitution,  nothing  in  the  natural  equity  or 
justice  of  the  case,  which  forbids  that  this 
recompense  should  be  made  in  property  in- 
stead of  money,  or  in  any  other  form  which 
secures  to  the  owner  a fair  equivalent  for  the 
land  of  which  he  has  been  de])rived.  It  is 
upon  this  principle  that  benefits  were  s(d  off 
against  damages  under  the  Canal  Laws,  and 
if  the  land  of  a farmer  of  the  value  of  one 
hundred  or  one  thousand  dollars  was  taken 
to  construct  the  work,  and  the  canal  when 
completed  would  enhance  the  value  of  his 
remaining  pro])erty  lo  au  equal  or  greater 
amount,  no  other  compensation  was  made  to 


117 


him.  A similar  provision  has  been  made  in 
many  other  statutes.  It  is  the  only  jnst  and 
reasonable  ride  on  the  subject,  a ditferent  one 
would  tax  the  public  for  the  benefit  of  indi- 
viduals. What  then  is  the  case  of  these  ap- 
pellants? They  have  had  the  nninterrujited 
enjoyment  of  their  land  down  to  the  present 
time;  and  now  when  it  is  to  be  taken  from 
them  they  are  to  receive  a just  compensation. 
A prospective  appropriation  of  the  property 
to  the  public  use  was  made  in  1819;  but  the 
land  was  not  then  taken  nor  were  the  owners 
deprived  of  any  privilege  whatever,  in  rela- 
tion to  its  beneficial  enjoyment,  save  that  of 
reciuiring  pajunent  for  any  buildings . which 
they  might  erect  on  the  site  of  the  streets 
before  the  time  arrived  for  opening  them. 
Admitting  that  this  privilege  could  not  be 
taken  from  them  without  a reasonable  recom- 
pense, it  cannot  be  doubted  for  a moment  that 
they  have  received  this  recompense,  and  that, 
too,  many  times  over,  etc.” 

In  the  Matter  of  Widening  Wall  Street, 
17  Barb.,  617. 

Widening  of  Wall  Street  in  ISbl,  jnirsuant  to  a 
resolution  of  that  year,  t^uestion  related  to  fiay- 
ment  of  damages  for  building  erected  subserpumt 
to  passage  of  resolution. 

Held  (Head  Note)  •'  “The  act  whieli 
authorized  the  laying  out  of  the  upf)er  paii  of 
the  city,  and  the  opening  of  streets  there,  and 
prohibited  compensation  to  those  who  should 
build  on  the  site  of  the  streets  then  laid  out 
(2  K.  L.  of  1813,  p.  414),  also  authorized  tin* 
eorporation  to  extend,  eidarge  or  othen\*ise 
improve  any  street  in  the  lower  f)art  of  the 
city,  but  imposed  no  rest I’iet ion  on  the  right 
of  the  owners  in  that  section  to  receive  com- 


118 


peiisatioii  for  their  Imildings  at  whatever 
time  erected.  This,  by  implication,  leaves  to 
the  owners  in  the  lower  i)ortion  of  the  city  the 
general  right  to  improve  their  lands,  when 
and  as  they  please,  nntil  such  lands  shall  he 
finally  occupied  by  the  public.” 

In  the  opinion,  Roosevelt,  J.,  discussed  the  pro- 
vision of  the  act  of  1813,  and  seems  to  have  been 
of  the  opinion  that  it  was  constitutional. 

Matter  of  Opening  Rogers  Avenue,  29 
Al)bott’s  New  Cases,  361. 

Provision  of  Act  of  1869  affecting  certain  lands 
in  Flatbnsh  that  no  compensation  should  be  made 
to  owners  of  premises  erecting  structures  upon 
the  portions  thereof  shown  upon  map  to  he  made 
pursuant  to  said  act  held  unconstitutional.  Cullen, 
J.,  writing  the  opinion. 

In  the  course  of  his  opinion  he  said  that  the 
'Matter  of  127tJi,  Street  was  doubtless  well  decided 
if  it  considered  the  Act  of  1813,  and  filing  the  map 
thereunder  worked  a limited  appropriation  of  the 
land  as  of  that  time. 

Seaman  vs.  Hicks,  8 Paige  Ch.,  655. 

The  Chancellor  in  this  case  discussing  Matter 
of  Furman  Street  after  saying  that  where  the 
circumstances  were  such  that  the  immediate  loca- 
tion of  streets,  according  to  a settled  plan,  would 
he  of  more  actual  benefit  to  the  owner  of  tlu'  resi- 
due of  such  laud  than  the  ])resent  use  of  that  part 
of  the  laud  thus  a])])ro])riated,  the  intention  of  the 
legislature  may  have  he(m  to  deprive  the  owner 
of  com))ensation  for  buildings  ('reeled,  hut  further 
ha  id : 


119 


“I  think,  however,  the  position  cannot  he 
maintained,  that  where  an  individual  has  a 
single  vacant  lot,  in  a city  or  village,  which 
lot  is  of  great  value  for  building  purposes 
and  worth  little  or  nothing  for  any  other  use, 
the  legislature  may  authorize  the  corporation 
to  appropriate  such  lot  prospectively,  to  be 
opened  and  used  as  a street  at  its  unimproved 
value,  and  to  be  paid  for  at  some  future  period 
when  the  corporation  shall  think  proper  to 
order  such  street  to  be  opened;  thereby  de- 
priving the  owner  of  the  whole  beneficial  use 
of  his  lot,  for  an  indefinite  time,  without  any 
equivalent  whatever  for  the  damage  he  must 
sustain  in  consequence  of  being  deprived  of 
the  power  of  building  upon  or  otherwise  im- 
proving the  lot.  * * * And  as  my  decision 
in  this  case  depends  upon  another  or  rather  a 
different  (juestion,  it  is  not  necessary  that  I 
should  express  any  definite  opinion,”  etc. 

It  appears  that  woven  into  the  Constitution  of 
1777  is  the  guaranty  that  no  citizen  shall  be  de- 
prived of  his  rights  except  “by  the  law  of  the 
land,”  which  means  “due  process  of  law”;  that 
the  guaranty  in  the  Constitution  of  1777  has  been 
included  in  about  identical  language  in  all  the 
Constitutions  of  the  State  since  that  ti)ne;  and 
that  saifl  guaranty  as  contained  in  the  later  Con- 
stitutions has  been  construed  as  applicable  to 
property  as  well  as  to  personal  rights. 

It  also  apjjears  that  “due  process  of  law,”  as 
construed  by  the  courts  of  our  own  State  and  of 
the  United  States,  is  a guaranty  against  the  taking 
of  property  for  public  use  without  just  coiTipeii- 
sation,  and  that  prohibitions  against  erections  of 
buildings  similar  to  that  containcfl  in  tli(>  act  of 
1S1‘>  have  been  behl  a taking  of  propei  ty. 


120 


It  also  appears  that,  long  before  the  Coiistitn- 
tioii  of  1821,  the  courts  of  this  State  and  text 
writers  recognized  the  principle  as  one  of  the 
fundamental  principles  upon  which  our  govern- 
ment was  founded,  that  private  property  could 
not  he  taken  for  public  use  without  compensation. 

Under  these  circumstances  it  would  seem  that 
the  decision  in  Matter  of  Furman  Street  (17 
Wench,  651),  doul)ted,  as  authority  in  its  own  day, 
as  we  see  in  8 Paige’s  Chancery,  and  the  decision 
in  the  Matter  of  127th  Street^  must  l^e  considered 
as  out  of  line  in  the  jurisprudence  of  this  State, 
as  a departure  from  the  legal  precedents  exist- 
ing at  the  time  of  their  rendition,  and  overruled 
in  fact  by  the  construction  of  “due  process  of 
law”  contained  in  Forster  vs.  Scott  and  the  otlier 
cases  following  that  decision  cited  above. 

We  think  the  foregoing  discussion  disposes  of 
the  proposition  that  there  was  any  constitutional 
force  in  the  provision  of  the  act  of  1813  denying 
property  owners  compensation  for  any  erections 
thereafter  placed  upon  lands  covered  by  these 
paper  streets.  However,  assuming  there  is  any 
force  in  the  contention  of  the  defendants  that  this 
provision  of  the  act  of  1813  was  at  the  time  valid, 
how  does  that  justify  the  conclusion  that  the  filing 
of  a map  in  1811  was  in  legal  effect  the  appropria- 
tion of  land  for  street  purposes  in  such  a sense  as 
to  constitute  Fourth  Avenue  for  its  entire  leiiglh 
a legally  opened  public  street,  at  the  time  tlie 
charter  of  the  New  York  and  Harlem  Railroad 
(^om])any  was  granted?  No  adjudicated  case  has 
been  found  which  sustains  any  snch  extraordinarx^ 
claim.  The  decisions  are  the  other  way.  Ever\' 
action  on  the  part  of  the  city  in  taking  proceedings 
under  the  act  of  181.3  to  o])en  streets  showii  on  the 


121 


city  map  is  an  admission  that  the  filing  of  the  map 
did  not  constitute  these  strips  of  laud  public 
streets,  or  impress  them  with  any  trust,  however 
shadowy,  for  public  purposes.  As  frequently  said 
by  the  courts,  it  was  simply  a map  which  was  to 
guide  the  city  in  making  future  developments. 

When,  therefore,  the  city  gave  its  consent,  as 
required  by  the  charter  of  the  New  York  and 
Harlem  Railroad  Company,  to  the  occupation  of 
this  unopened  street,  it  was  simply  complying  vdth 
one  of  the  conditions  upon  which  the  general  grant 
was  made  to  the  Railroad  Company.  It  was  in  no 
possible  sense  the  grant  of  a special  franchise 
within  the  meaning  and  intent  of  the  tax  law.  The 
right  to  occupy  this  unopened  street  was  a general 
franchise  granted  by  the  Legislature  subject  to 
the  city’s  consent,  and  when  that  consent  was 
obtained  the  condition  was  satisfied,  and  the  grant 
of  the  general  franchise  became  vested. 

It  is  argued  that  because  the  city  under  the 
resolution  approved  February  1,  1832,  gave  per- 
mission to  the  railroad  company  to  occupy  lands 
owned  by  it  for  the  purpose  of  its  railroad,  the 
railroad  company  could  not  possibly  secure  title 
))y  adverse  possession  as  against  the  city.  Whether 
that  be  true  or  not  with  reference  to  tbe  common 
lands,  and  the  lands  ceded  for  street  purposes,  thf* 
city’s  consent  had  absolutely  notbing  to  do  with 
lands  owned  by  private  parties,  such  as  the  infant 
Benson,  Margaret  IMcOown,  Archibald  Watt,  and 
others,  and  as  to  such  lands  the  occupation  of  tbe 
railroad  company  was  adv^erse,  and  under  claim 
of  title  conferred  by  existing  rleeds  produced  and 
received  in  evidence  in  this  case.  There  is  no 
question  here  of  a lost  deed,  nor  are  presr-riplive 
rights  involved.  Whether  or  not  tbe  company 
could  hold  adversely  against  tbe  city  as  to  lands 


122 


owned  by  the  city  and  covered  by  its  consent,  the 
fact  remains  that  after  over  20  years  of  actual 
occupation  of  such  lands,  the  rights  of  the  railroad 
company  were  recognized  in  the  most  solemn  man- 
ner possible  by  the  street  opening  proceedings, 
and  awards  made  which  recognized  one  part  of 
the  company’s  title  as  good  as  another  tlirougliont 
the  entire  stretch  from  45th  Street  to  the  Harlem 
River.  How  can  the  State  or  the  City  after  the 
lapse  of  nearly  sixty  years  question  the  binding 
force  of  this  adjudication? 

Some  loose  expressions  in  some  of  the  opinions 
rendered  in  the  Park  Avenue  viaduct  litigation, 
such  as  in  the  Birrell  case  (41  App.  Div.,  54(5),  in 
the  Pape  ease  (74  App.  Div.,  175),  and  in  tlie 
Caldivell  case  (111  App.  Div.,  164),  refer  to  the 
right  left  in  the  company,  after  the  street  opening 
proceedings  were  consummated,  as  being  a “fran- 
chise.” Of  course  it  was  a franchise.  The  com- 
pany got  a general  franchise  from  tlie  Legislature 
and  the  city  did  not  disturb,  and  had  not  the 
power  to  disturl),  the  Railroad  Company  in  the 
exercise  of  that  franchise.  But  is  it  seriously 
claimed  that  these  judicial  expressions  used  in 
discussing  questions  wholly  foreign  to  the  present 
subject,  are  to  be  contorted  into  adjudications, 
that  the  right  thus  left  in  the  Harlem  Company 
is  a special  franchise  within  the  meaning  of  the 
tax  law? 

The  learned  counsel  for  the  defendants  u])on 
the  trial  of  this  case  before  the  Referee  went  into 
a very  elaborate  analysis  of  the  deeds  obtained 
by  the  Railroad  Company  from  private  owjiei's 
for  portions  of  its  right  of  way,  which  no  oiu' 
has  ever  claimed  was  vested  ])rior  to  the  stre('t 
opening  proceedings  in  the  City  of  New  York  in 
its  ])rivate  ca])acity  or  otherwise.  Attention  was 


123 


drawn  to  the  apparent  fact  that  in  some  cases 
a deed  which  the  railroad  company  secured  was 
from  a former  owner  who  had  at  tlie  time  of 
executing  the  grant  to  the  railroad  company  by 
previous  instruments  to  private  parties  divested 
himself  of  title  to  the  bed  of  Park  Avenue,  as  in 
the  case  of  the  strip  of  land  assumed  to  be  ac- 
quired from  Dudley  Selden,  or  from  Peter  Poillon. 
Assuming  all  this  to  be  true,  how  does  the  failure 
of  the  New  York  and  Harlem  Railroad  Company 
to  secure  absolute  and  indefeasible  title  from  the 
private  owners  owning  it  operate  to  constitute  a 
special  franchise,  and  taxable  as  such,  in  the  lands 
title  to  which  was  thus  defective! 

The  result  of  a holding  that  the  assessment  as 
to  the  original  24-foot  strip,  containing  the  two 
tracks,  is  illegal  is  to  vitiate  the  whole  assessment , 
ichether  or  not  the  two  outer  tracks  laid  under 
authority  of  Chapter  702  of  the  Latvs  of  1872  he 
considered  as  constituting  a special  franchise,  the 
assessment  being  a unit  and  inseparable. 

Upon  the  summing  up  of  this  case  before  the 
Referee  the  learned  counsel  for  defendants  was 
asked  what  the  result  would  be  of  a holding  that 
no  s[)ecial  franchise  existed  under  the  terms  of 
the  tax  law  as  to  the  original  central  strip  24  feet 
in  width,  containing  the  two  central  tracks,  but 
that  grant  of  the  right,  under  chapter  702  of  the 
laws  of  1872,  to  lay  two  additional  tracks  exterior 
to  the  24-foot  strip  was  ))Ossibly  a special  fran- 
chise, and  his  reply  was,  that  the  assessment  ccnii- 
plaine’d  of,  in  such  evmit,  would  not  be  illegal,  but 
merely  excessive,  because  the  central  strip  con- 
taining the  two  middle  tracks,  and  exempt  from 
the  assertion  of  ariy  special  franchise,  was  used  in 
connection  with  the  two  exterior  tracks. 


124 


The  logic  of  this  position  forced  him  to  make 
the  fnrtlier  claim  that  if  the  Tax  C'ommissioners 
had  assessed  the  entire  terminal  at  42nd  Street 
as  a part  of  the  alleged  franchise  in  Park  Avenue, 
such  assessment  would  not  be  void,  but  merely 
excessive.  Such  a position  if  sound  would  justify 
the  Tax  Commissioners  in  assessing  in  this  alleged 
special  franchise  the  entire  railroad  to  Buffalo 
as  being  property  used  in  connection  ivith  the 
special  franchise. 

It  seems  hardly  necessary  to  pursue  this  ab- 
surdity seriously.  The  State  Board  of  Tax  Com- 
missioners has  no  authority  whatever  to  assess 
any  property  except  as  that  authority  is  expressly 
conferred  by  statute,  and  that  authority  is  clearly 
confined  by  the  statute  to  assessing  special  fran- 
chises, and  the  physical  property  in  the  streets 
covered  by  such  franchises.  The  language  is : 

“A  special  franchise  shall  be  deemed  to 
include  the  value  of  the  tangible  property  of 
a person,  co-partnership,  association  or  cor- 
poration situated  in,  upon,  under  or  above  any 
street,  highway,  public  place  or  public  waters, 
in  connection  with  the  special  franchise.  The 
tangible  property  so  included  shall  be  taxed 
as  a part  of  the  special  franchise.” 

The  railroad  in  the  central  portion  of  Park 
Avenue  24  feet  in  width  is  not  the  occupation  of  a 
street,  highway,  or  pul)lic  place,  within  the  terms 
of  the  act,  because  such  occupation  antedates  the 
existence  of  the  street.  Therefore,  the  property 
of  the  railroad  company  in  the  central  24-foot 
strip  is  in  i)recisely  the  same  category  legally  as 
file  property  it  owns  from  42nd  Street  to  50th 
Street  between  the  blocks,  and  which  is  used  in 
connectimi  with  its  raili’oad  business.  Tlie  right 
to  assess  the  one  class  of  ])ro])(‘rty  in  connection 


125 


with  the  alleged  special  franchise  as  to  the  two 
exterior  tracks  is  no  greater  in  the  one  case  than 
in  the  other.  Xo  one  has  ever  suggested,  nntil 
counsel  for  defendants  was  driven  to  it  by  the 
exigencies  of  his  position,  that  the  Board  of  Tax 
Commissioners  could  include  the  Grand  Central 
Station  in  the  assessment  of  the  alleged  special 
franchise  in  Park  Avenue.  Any  attempt  to  do  so 
would  render  the  assessment  manifestly  void,  and 
as  we  have  shown  in  this  ease,  such  property  has 
always  been  assessed,  and  is  now  assessed,  by  the 
local  tax  board. 

It  has  been  repeatedly  held  that  where  portions 
of  an  indivisible  assessment  are  illegal  and  void, 
the  whole  assessment  is  illegal  and  void. 

The  precise  question  came  before  Senator  Els- 
berg  as  Referee  in  People  ex  rel.  Harlem  liiver  d 
Port  Chester  Railroad  Company  vs.  State  Board 
of  Tax  Commissioners,  reported. 

Laiv  Journal,  April  24,  1909. 

The  report  of  tlie  Referee  holding  the  asses- 
ment  void  was  confirmed  by  the  Special  Teiin, 
Mr.  Justice  Betts,  sitting,  and  no  ap]>eal  has  been 
taken  l)y  the  defendants  or  the  intervening  munici- 
pality from  that  determination. 

In  the  Port  Chester  Railroad  case  the  railroad 
comj)any  was  assessed  for  the  siqjposed  special 
franchise  involved  in  the  ci-ossing  of  two  ],nblie 
highways  in  the  Borough  of  the  Bronx;  one  of 
them,  known  as  Hast  lo2nd  Sti-eet,  was  opened 
and  existed  as  a public  street  prior  to  the  building 
of  the  railroad,  and  the  other,  known  as  the  Bronx 
& Pelham  Ihirkway,  ha<l  been  opened  subse(pi(‘nl 
to  the  building  of  the  railroad  and  aci'oss  tln^ 
tracks  thereof.  It  was  held  that  lU)  special  I’ran- 
chise  existed  with  reference  to  the  highway  which 


126 


was  created  subsequent  to  the  building  of  the 
railroad,  and  that  as  but  one  assessment  for  both 
crossings  had  been  made,  and  no  means  were 
afforded  for  separating  the  invalid  from  the  valid 
portions  of  the  assessment,  the  whole  was  void 
and  subject  to  canceUation.  Senator  Elsberg  says 
in  the  course  of  his  opinion : 

“Here,  on  the  other  hand,  the  fee  of  the 
lands  described  as  being  laid  out  for  the 
Bronx  and  Pelham  Parkway  was  only  to  vest 
in  the  city  upon  the  final  confirmation  by  the 
Supreme  Court  of  the  report  of  the  commis- 
sioners appointed  to  condemn,  and  the  amend- 
ment of  1888,  in  my  opinion,  affected  the 
property  to  be  taken,  that  is  to  say,  the  prop- 
erty laid  out  for  the  parkway,  l)y  excluding 
the  relator’s  property  therefrom.  There  is 
at  least  some  confirmation  of  this  opinion  in 
the  report  of  the  commissioners  of  condemna- 
tion and  in  the  approval  by  the  Supreme 
Court  of  that  report.  And  it  might  be  added 
that  this  conclusion  in  no  way  conflicts  with 
the  objects  of  the  legislation  under  which  the 
assessment  in  question  is  claimed  to  have 
been  made. 

“The  franchise  Tax  Law  was  enacted  in 
pursuance  of  a wise  public  policy  and  to  meet 
the  just  demand  that  grants  of  the  privilege 
to  occupy  public  highways  should,  as  valuable 
property  rights,  be  subjected  to  the  taxing 
power  of  the  State.  The  beneficent  })urpose 
of  the  law  can  l)e  accom])lished  without  strain- 
ing its  meaning  in  the  effort  to  apply  it  to  a 
situation  which  it  was  never  intended  to  cover. 
A railroad  constructed  long  befoi’e  a highway 
is  laid  out  to  cross  it  and  expressly  exempted 
from  being  taken  as  part  of  the  highway, 
cannot  be  said  to  be  ojierated  at  such  crossing 
on  the  theory  of  a grant  that  was  never  made. 


127 


Xor  can  its  maintenance  at  such  crossing  be 
claimed  to  be  either  by  virtue  of  an  ‘ease- 
ment over  lauds  of  the  city’ — when  the  city 
never  acquired  the  lands,  as  shown  by  the 
report  of  the  commissioners  of  condemnation 
and  the  confirmation  by  the  Supreme  Court  of 
that  report — or  by  virtue  of  any  public  ease- 
ment whatever,  when  no  public  easement  ever 
was  created.  The  suggestion  that  the  exemp- 
tion contained  in  the  Act  of  1888  itself  con- 
stitutes the  ‘permission’  to  ‘maintain  and 
operate’  mentioned  in  the  statute,  ignores  the 
fact  that  quoad  the  exemption  there  is  no 
‘street,’  ‘highway’  or  ‘public  place’  within 
the  meaning  of  the  statute.  In  my  opinion, 
the  assessment  against  the  relator,  in  so  far 
as  respects  the  Bronx  and  Pelham  Parkway 
crossing,  was  not  authorized  ])y  the  law  and 
is  invalid. 

“The  objections  of  the  relator  to  the  assess- 
ment reviewed  being  not  sustained  as  to  the 
East  One  Hundred  and  Thirty-second  Street 
crossing  and  sustained  as  to  the  Bronx  and 
Pelham  Parkway  crossing,  there  is  still  left 
to  consider  whether  the  entire  assessment 
should  be  vacated,  or  whether  a correction  of 
the  assessment  or  a reassessment  should  be 
ordered.  The  State  Board  of  Tax  Commis- 
sioners did  not  separate  the  assessment  as 
between  the  two  alleged  special  franchises 
assessed,  and  it  has  been  held  that  whei(‘  a 
tax  or  assessment  sought  to  be  enforced 
against  a pro|>erty  owner  ‘is  made  up  of  dif- 
ferent items  or  elements  all  blended  together, 
some  of  which  are  illegal  and  others  legal,  he 
may  resist  the  payment  of  the  whole  in  tin; 
absence  of  some  statute  which  modifies  the 
general  rule  ( Poth  vs.  The  Mayor,  lol  N.  Y., 
lb,  10).  It  has  also  been  held  that  under  the 


128 


Tax  Law  the  court  can  order  a reassessment 
or  correct  an  assessment  only  in  case  where 
it  is  ‘erroneous’  or  ‘unequal,’  and  that  an 
assessment  can  be  said  to  be  erroneous  only 
in  the  case  of  an  overvaluation;  that  where 
the  assessment  is  illegal  the  statute  author- 
izes no  relief,  except  that  of  striking  it  from 
the  roll  {People  ex  rel.  Garden  City  Co.  vs. 
Valentine,  5 App.  Div.,  520).  It  follows  that 
the  assessment  under  review  in  the  present 
case  should  be  vacated  and  set  aside.” 

[There  was  no  appeal  from  an  order  con- 
firming the  Referee’s  report  entered  January 
7,  1908.] 

The  learned  Referee  in  his  opinion  endeavored 
to  distinguish  the  case  decided  by  Senator  Els- 
berg  on  the  ground  that  in  the  case  of  the  Bronx 
k Pelham  Parkway  street  opening  the  land  occu- 
pied by  the  railroad  was  excepted  and  was  not 
included  in  the  condemnation,  whereas  in  the 
ease  of  Park  Avenue  the  land  of  the  railroad  com- 
pany was  included.  The  decision  of  the  Court  of 
Appeals  in  the  Butfalo  special  franchise  case  (203 
N.  Y.,  107,  destroys  the  validity  of  this  distinction. 
Equally  vain  seems  the  attempt  of  counsel  for  de- 
fendants to  justify  the  legality  of  this  assessment 
by  the  assertion  that  chapter  702  of  the  Laws  of 
1872,  and  cha])ter  339  of  the  Laws  of  1892, 
which  authorized,  and  directed  the  inq)rove- 
ments  which  have  been  described,  consti- 
tuted a conferment  of  an  entirely  new  fran- 
chise ui)on  the  railroad  company,  thcrehy 
])ringing  the  case  within  the  terms  of  the  tax- 
law.  The  act  of  1872  was  an  exi)ress  recognition 
of  the  superiority  of  the  rights  of  the  railroad 
company  over  the  rights  of  the  city;  an  express 
recognition  that  the  railroad  com]>any’s  rights  in 


Park  Avenue  to  maintain  its  railroad  were  as  in- 
defeasible as  the  rights  of  the  city  to  use  the  por- 
tions of  Park  Avenue  not  occupied  by  the  railroad 
for  street  purposes,  and  the  intent  of  the  act  was 
to  separate  those  two  functions,  street  use  and 
railroad  use. 

The  act  of  1892  made  no  enlargement  of  the 
rights  of  the  railroad  company.  It  compelled  the 
latter  solely  in  the  interest  of  improving  Park 
Avenue  as  a street  to  abandon  a perfectly  ade- 
quate and  satisfactory  structure  and  use  in  its 
stead  an  expensive  steel  viaduct  of  no  greater 
capacity  but  much  more  costly  to  maintain. 

If  our  contentions  under  this  Point  are  sus- 
tained the  entire  assessment  falls  as  illegal,  and 
further  discussion  would  be  unnecessary^.  We  are, 
however,  presenting  all  the  questions  in  this  case 
(recognizing  the  limitations  in  the  jurisdiction  of 
this  Court  imposed  by  a unanimous  affirmance 
below)  not  heretofore  disposed  of  by  the  decisions 
of  the  courts. 


130 


SECOND  POINT. 

The  State  Board  of  Tax  Commissioners 
having  adopted  the  theory  of  earnings  in 
determining  the  intangible  element  in 
special  franchise  assessments  generally  in 
New  York  County,  their  assessment  of  the 
intangible  element  in  the  alleged  special 
franchise  in  Park  Avenue  should  be  tested 
by  the  application  of  that  theory.  Re- 
lator’s findings  on  this  subject  were 
erroneously  refused. 

In  this  case  we  are  constrained  to  discuss  the 
l)roposition  above  stated  under  the  limitations 
imijosed  by  the  unanimous  affirmance  by  the  A])- 
})ellate  Division.  We  do  not,  however,  under- 
stand that  discussion  is  foreclosed  if  there  are 
tindings  in  the  record  which  raise  the  question. 
In  People  ex  rel  Brooklyn  Heights  Railroad  Com- 
pany, etc.,  V.  State  Board  of  Tax  Commissioners, 
there  was  a unanimous  affirmance  of  the  finding 
by  the  Special  Term  that  the  intangible  element 
was  of  no  value.  The  City,  Intervenor,  appealed. 
This  Court  said,  204  N.  Y.  Advance  Sheets  No. 
585,  page  93 : 

“Order  affirmed  with  costs  on  the  ground 
that  the  state  of  the  record  before  us  pre- 
cludes this  Court  from  considering  the  ob- 
jections raised  by  the  appellant,  the  A])])el- 
late  Division  having  unanimously  affirmed 
the  order  of  the  Special  Term  and  the  Find- 
ings of  Fact  made  by  it,  and  the  appellant 
having  presented  to  the  Trial  Court  no  re- 
quest to  find  by  which  the  questions  it  now 
seeks  to  raise  ivould  he  presented.”  (Italics 
ours). 


In  the  case  at  bar  findings  were  proposed  and 
refused. 

See  Relator’s  proposed  findings,  Xos.  21, 
22,  23,  25,  2(i  and  27  (Fols.  1872  to  1877,  1879 
to  1881),  refused  to  which  excei)tions  were 
taken  (fols.  2287  to  2289). 

There  was  no  conclusion  made  by  the  Referee 
or  the  Court  to  the  effect  that  the  Relator  had 
not  sustained  the  burden  of  proof  of  showing  that 
the  assessment  made  by  the  State  Board  was  ex- 
cessive. The  Referee  or  the  Court  at  Special 
Term  simply  took  the  figure  of  $10,192,000,  Avhich 
was  the  assessment  made  by  the  State  Board, 
and  equalized  it  by  taking  G7%  thereof  and  fixed 
. that  “as  the  assessment  of  the  special  franchise 
in  Park  Avenue  of  the  Relator  for  the  year  1900“ 
(fob  1826).  Taking  this  in  connection  with  the 
Finding  of  Fact  that  the  fair  cost  of  reproducing 
the  existing  railroad  structures,  existing  on  the 
second  Monday  of  January,  1900,  in  Park  Avenue 
from  45th  Street  to  a point  near  133rd  Street, 
pro])er  deductions  by  reason  of  wear  and  tear  and 
the  deterioration  of  time  having  been  made,  was 
the  sum  of  $4,889,300  (fols.  1656-1657),  with  lh(‘ 
further  finding  (fols.  1673  to  1674)  that  the  final 
assessment  of  $10,192,000  for  the  year  1900,  fixed 
by  the  State  Board  of  Tax  Commissioners,  was 
the  sum  of  the  amounts  found  l)y  them  to  i-(‘])i'e- 
sent  the  amounts  of  the  tangil)le  property  and 
the  intangible  element,  respectively,  it  is  evident 
that  the  f’ourt  lias  found  as  the  full  value  of  tin* 
intangible  element  in  this  franchise,  tlie  sum  of 
$5,292,700.  Due  exccfition  to  the  conclusion  of 
the  Special  Tenn  tliat  the  ass(‘ssment  at  full 
value  was  $10,192,000  was  taken  by  tin*  Relator 
(fob  2285). 


132 


The  question  of  law  which  the  Relator  desires 
to  review  here  is  whether  its  method  of  showing 
how  the  intangible  element  should  he  valued  on 
the  earnings’  basis  is  or  is  not  correct.  The 
learned  Appellate  Division  in  its  opinion  did  not 
point  out  any  definite  basis  upon  which  the  in- 
tangible element  in  the  alleged  special  franchise 
could  or  should  he  valued,  and,  as  the  record  left 
that  court,  it  is  impossible  for  the  Relator  now 
or  hereafter  to  review  any  assessment  by  the 
State  Board,  no  matter  how  evidently  an  irre- 
sponsible guess  and  no  matter  how  enormous 
that  assessment  might  he.  The  writ  of  certiorari, 
under  such  circumstances,  is  purely  illusory. 

In  view  of  the  consistent  manner  in  which  the 
courts  have  aiqfiied  the  net  or  gross  earnings 
theory  to  the  valuation  of  the  intangible  element 
in  special  franchises  and  in  numerous  decisions 
have  set  forth  the  elements  of  debit  and  credit, 
we  submit  that  Relator  is  entitled  to  some  basis 
on  which  it  can  test  an  assessment  of  this  kind. 
We  cannot  for  a moment  assume  that  the  courts 
will  ultimately  recognize  an  unassailable  arln- 
trary  power  on  the  part  of  the  Tax  Commission- 
ers to  set  any  figure  they  please  and  then  deny 
the  aggrieved  party  any  practical  method  of  re- 
view. When  the  case  last  above  cited  {People  ex 
re]  BrooMpn  Heights  Pailroad  Co.,  etc.,  v.  State 
Board  of  Tax  Commissioners)  was  before  the 
Appellate  Division  (146  A]q).  Div.,  373),  Kellogg, 
J.,  said  at  page  373  : 

“The  object  of  an  assessment  is  not  neces- 
sarily to  ])roduce  a tax  upon  the  intangible 
rights,  l)ut  is  to  determine  what  a special 
franchise  is  worth,  and,  if  the  basis  of  com- 
putation is  right,  it  is  quite  immaterial  for 
the  i)nrpose  of  fairness  whether  a tax  on  the 
intangible  i)art  of  a fi'anchise  results  or  not. 


1 oo 

loo 

If  there  is  no  value  there  is  no  tax.  The  as- 
sessing l)oard  and  the  courts  cannot  torture 
facts  and  conditions  to  produce  a tax — a tax 
follows  a fair  and  just  valuation.” 

With  the  foregoing  by  way  of  preliminary,  ve 
i)eg  to  place  before  the  Court  the  discussion  on 
tliis  subject  which  was  submitted  to  the  learned 
Appellate  Division. 

In  assessing  any  special  franchise  which  falls 
within  the  definition  of  the  tax  law  there  are  two, 
and  but  two,  elements  to  consider: 

(1) .  The  value  of  the  intangible  property 
owned  by  the  relator,  or  its  lessor,  as  the  case  may 
be;  and 

(2) .  The  value  of  the  intangible  right  of  the 
relator  to  have,  maintain,  use  and  operate  its 
tangible  property  in  the  public  street,  highway 
or  place  involved. 

These  two  s}jecies  of  property  it  seems  cannot 
be  separated,  or  considered  apart  one  from  the 
other,  but  for  purposes  of  taxation  they  can  l)e, 
and  should  be,  separately  appraised.  These  ap- 
praisals of  the  two  elements  must  proceed  upon 
entirely  distinct  bases;  as  to  the  first  element, 
that  of  the  tangible  propeidy,  the  method  is  well- 
settled  and  of  practically  universal  application, 
namely,  the  tangible  i)roperty  is  to  bo  valued  at 
not  to  exceed  its  cost  of  repi’oduction  less  d('i)r(>- 
ciation  from  time,  wear  and  tear.  With  i-eferenc(' 
to  the  valuation  of  the  intangible  element,  tin* 
Legislature  laid  down  no  special  rule.  Tin*  Court 
of  Appeals  has  said  in  People  ex  rel.  J<i)H(ii(<i 
Water  Supphj  Cowpanp  vs.  State  Poard  of  Tax 
Comwissioners  (Ibfi  X.  Y.,  39),  that  in  tin*  absenc(> 
of  any  sj)ecific  method  of  valuation  f)rescribed  by 
the  I^egislature,  the  courts  were  not  compelled  to 


134 


select  some  one  particular  method  and  insist  upon 
its  application  to  all  cases.  The  gist  of  the  Court 
of  Apijeal’s  decision  in  the  Jamaica  Water  Sup- 
ply Company  case  is  that  the  Board  of  Tax  Com- 
missioners ought  to  adopt  some  method,  ought  to 
disclose  the  method  adopted  in  its  return  to  the 
Avrit  of  certiorari  where  its  assessment  is  under 
review,  and  ought  to  return  the  facts  upon  which 
it  applied  its  theory  of  valuation,  so  that  an  intel- 
ligent review  thereof  could  be  made  by  the  courts, 
first,  to  see  if  the  theory  adopted  was  a proper 
one,  and,  second,  to  see  that  such  theory  of  valua- 
tion, if  proper,  was  fairly  and  justly  applied  to 
the  ascertained  facts  in  the  case. 

In  most  minds  the  only  rational  or  logical  the- 
ory of  valuing  the  intangible  element  is  that  de- 
rived from  the  earnings  of  such  franchise.  This 
is  often  spoken  of  as  the  “net  earnings  theory.” 
While  the  net  earnings  theory  seems  the  natural 
and  logical  one  to  take  in  certainly  the  vast  ma- 
jority of  special  franchises  Avhich  are  to  be  as- 
sessed for  taxation,  and  was  the  theory  ado])ted 
by  the  Special  Term  in  the  Jamaica  Water  Sup- 
ply Company  case,  and  ai)[)roved  by  the  Court  of 
A])peals,  it  is  conceivable  that  the  gross  earnings 
of  a special  franchise,  with  proi)er  regard  to  the 
question  whether  after  paying  reasonable  operat- 
ing expenses,  there  is  any  suri)lus  left,  may  also 
be  taken  as  the  basis  of  valuation.  We  have  the 
testimony  of  the  defendant  Tax  Commissioners 
that  such  was  the  course  ado])ted  by  them  with 
reference  to  valuing  s])ecial  franchises  in  the  City 
of  New  York  (fol.  417),  but  that  in  the  present 
case,  having  no  facts  before  them  on  which  to 
])redicate  a findiiig  of  what  the  gross  earnings, 
or  the  net  earnings,  might  be  of  this  poidion  of 
the  tracks  of  the  New  York  and  TTarlem  Railroad, 


]35 


they  simply  assumed  that  the  intangible  element 
was  equal  to  the  value  of  the  tangible-  property, 
and  the  sum  of  these  two  items  without  doubt 
makes  up  the  assessment  of  the  special  franchise 
(fols.  411,  423). 

Major  Priest  testified  (fob  408)  that  upon  the 
tangible  property  of  the  alleged  special  franchise 
the  commissioners  placed  a valuation  of  substan- 
tially $5,000,000.  The  testimony  of  the  relator’s 
witness,  Mr.  W.  F].  Hoyt,  is  that  in  his  judgment 
the  value  of  the  tangible  i)roperty  on  the  second 
Monday  of  January,  1900,  was  the  sum  of  $4,889,- 
300  (fol.  305).  The  Court  below  found  that  this 
figure  represented  the  value  of  the  tangible  prop- 
erty in  (question  (fol.  1C56).  This  estimate  in- 
cludes all  of  the  proi)erty  which  the  Court  of  Ap- 
peals in  People  ex  rel.  The  New  York  and  Harlem 
Pailroad  Company  vs.  Board  of  Tax  Commission- 
ers (101  N.  Y.,  322),  held  was  subject  to  local 
assessment,  and  this  figure  is  only  about  $100,000 
less  than  the  api)raisal  put  upon  said  property 
by  the  State  Board  of  Tax  Commissioners. 

Mr.  Hoyt’s  estiniate  is  l)ased,  first  of  all,  upon 
a very  thorough  physical  examination  of  the 
structures,  and  a survey  thereof,  with  observa- 
tions as  minute  as  possible  of  the  condition  of 
the  structure,  and  the  effect,  so  far  as  visible,  of 
time,  and  wear  and  tear.  It  is  not  assumed,  of 
course,  that  the  tunnel  structure  erected  under  the 
act  of  1872  is  as  strong  and  enduring  as  it  was 
when  com[)leted  in  1875.  Some  depreciation  rei)re- 
sented  by  f)erc(>ntage  is  allowed.  At  the  same 
time,  it  is  true  that  in  some  res])ects  it  would  cost 
more  to-day  to  build  the  tunnel  than  it  did  when 
it  was  erected  by  reason  of  the  greater  cost  of 
labor  and  material.  Figuring  uj)on  the  ]»resent 
value  of  labor  and  material  of  tlie  kind  which  has 
entered  into  the  construction  of  this  railroad 


136 


structure  the  ])reseut  cost  of  reproducing  same  is 
worked  out,  and  then  a sum  is  deducted  based 
upon  a regular  percentage  for  depreciation. 

Mr.  Hoyt’s  testimony  is  briefly  given  on  direct 
examination,  but  the  same  was  the  summary  of  a 
vei’}^  elaborate  investigation  and  study  covering  a 
number  of  3*ears.  The  difficulty  of  cross-examin- 
ing this  witness  without  a very  thorough  investi- 
gation of  the  data  taken  and  the  method  of  treat- 
ing it,  was  recognized,  and  amplest  opportunity 
given  to  the  defendants^  through  their  expert,  to 
investigate  Mr.  Hoyt’s  data  and  methods.  This 
was  done  with  the  result  that  Mr.  Hoyt’s  estimate 
was  not  questioned  and  absolutely  no  evidence 
was  given  by  the  defendants  on  the  subject.  Mr. 
Hoyt’s  testimony,  therefore,  stands  uncontra- 
dicted and  unchallenged.  The  finding  of  the 
Court  seems  to  place  the  matter  beyond  further 
controversy. 

We  come  now  to  the  consideration  of  the  in- 
tangible element  and  take  np  first  the  data  before 
the  Commissioners  when  they  made  their  ap- 
praisal which  is  in  the  sum  of  $5,192,000,  which 
figure  last  named  is  derived  by  substracting 
$5,000,000,  the  value  of  the  tangible  property 
as  found  by  the  Tax  Commissioners  from  their 
total  assessment  of  $10,192,000. 

An  examination  of  the  rei)ort  of  the  New  York 
and  Harlem  Railroad  Comi)any  to  the  State 
Board  of  Tax  Commissioners  of  the  State  of  New 
York,  for  the  year  ending  June  30,  1899,  in  evi- 
dence (A])pendix,  p.  836,  fob  2506),  indicates  that 
it  was  made  out  on  blanks  furnished  by  the  Com- 
missioners with  various  schedules  from  A to  N 
inclusive,  calling  for  s])ecific  information  in  nu- 
merous details.  The  blank  form  treats  the  rail- 
road as  if  it  were  an  oi)erating  company,  and  as 


137 


if  its  entire  line  were  subject  to  the  franchise  tax 
law.  The  fact  of  the  case  is  that  the  New  York 
and  Harlem  Railroad  is  not  an  operating  com- 
pany, and  has  not  been  for  some  years.  Its  rail- 
road proi)erties  are  divided  into  two  distinct 
classes,  which  two  classes  of  road  are  separately 
leased. 

The  so-called  “steam  line,”  extending  from  the 
Grand  Central  Terminal  to  Chatham,  with 
branches  to  Lake  !Maho])ac  and  Port  Morris,  is 
leased  in  its  entirety  to  The  New  York  Central 
and  Hudson  River  Railroad  Company,  the  re- 
lator herein  (See  lease  in  evidence.  Exhibit  X, 
Appendix,  p.  789,  fob  2365).  The  term  of  this 
lease  is  for  401  years  from  April  1,  1873,  and  the 
rental  reserved  from  the  entire  steam  line,  being 
the  interest  on  the  bonds,  and  dividends  on  the 
stock,  is  $1,640,000.00  (See  Schedule  J of  said 
report,  p.  856). 

The  so-called  “surface  line,”  the  lower  termi- 
nus of  which  is  at  Broadway  and  Park  Row,  and 
the  upper  terminus  at  ^ladison  Avenue  near  the 
Harlem  River,  is  leased  to  the  Metropolitan 
Street  Railway  (-oinpany  for  $350,000,  j)lus  $2,500 
for  corporate  expenses,  per  annum. 

The  total  income,  which  might  be  called  the 
earnings  of  the  road,  including  interest  accrued 
on  installments  of  rental,  for  the  year  ending 
June  30,  1899,  was  $2,045,248.58  (Schedule  G,  p. 
855). 

When  a railroad  is  leased,  as  was  (he  steam 
line  of  the  New  York  and  Harlem  Railroad  Com- 
pany, the  rental  reserved  represents  simply  the 
of)inion  of  the  two  f)arties,  namely,  the  lessor  and 
the  lessee,  of  the  value  of  the  use  of  the  projierty 
leased,  and  while  this  rental  would  pi'obably 
throw  some  light  upon  the  value  of  these  ))ortions 


138 


of  the  steam  line  wliieli  extends  from  the  south 
line  of  45th  Street  to  a point  near  133rd  Street, 
such  proportionate  tigiire  would  not  in  fact  rep- 
resent the  actual  earnings  of  that  stretch  of 
track.  It  appears,  from  Schedule  M (p.  860),  in 
said  report,  that  the  total  miles  of  railroad  in- 
cluded in  the  steam  line  were  135.9.  The  portion 
of  said  railroad  which  is  claimed  to  constitute  a 
special  franchise,  namely,  from  the  south  line  of 
45th  Street  to  a point  near  133rd  Street  in  Park 
Avenue,  is,  as  shown  in  the  testimony  (fol.  338), 
4.44  miles  in  length.  If  we  assume  a mileage  pro- 
])ortion  based  upon  the  rental  received  of  $1,640,- 
000  we  have  a rental  of  not  quite  $12,068  per  mile., 
or  for  the  stretch  in  Park  Avenue  claimed  to  con- 
stitute a special  franchise  a proportionate  rental 
of  $53,581.92. 

If  we  follow  the  method  of  the  State  Board  of 
Tax  Commissioners,  and  take  5%  of  that  amount 
and  capitalize  it  by  dividing  it  by  the  tax  rate  for 
the  County  of  New  York  for  the  year  1900,  to  wit, 
.0224771  (fol.  934),  to  get  at  the  value  of  the  in- 
tangible element,  we  have  as  re]mesentmg  the  por- 
tioji  of  the  income  which  the  Tax  Commissioners 
concluded  was  proper  to  pay  as  the  tax  on  the  in- 
tangible element,  $2,679.10;  dividing  this  by  the 
tax  rate  of  the  County  of  New  York  for  the  year 
1900  we  have  as  a quotient  $119,192,  an  amount 
almost  negligible  in  comparison  with  the  figure 
of  $5,192,000,  arrived  at  by  the  Tax  Commission- 
ers as  the  value  of  the  intangible  element. 

It  seems,  however,  reasonably  apparent,  that 
although  the  New  York  and  Harlem  Railroad 
Company  complied  absolutely  with  the  require- 
ments of  the  Tax  Commissioners,  and  gave  i)re- 
cisely  the  information  demanded  in  so  far  as  it 
was  yjossihle  to  do  so,  the  Tax  Commissioners 


had  nothing  before  them  which  indicated  the 
actual  earnings  of  this  alleged  special  franchise; 
at  any  rate,  they  testified  to  that  effect  (fol.  410). 

For  the  purpose  of  verifying  the  statements 
made  in  the  report  and  to  have  definite  evidence 
in  the  record  that  the  so-called  “steam  line”  of 
the  New  York  and  Harlem  Eailroad  Company 
was  much  more  extensive  than  the  small  segment 
in  Park  Avenue,  testimony  by  the  company’s  en- 
gineers was  adduced  and  not  disputed  showing 
that  the  measured  distance  between  45th  Street 
and  a point  on  Park  Avenue  north  of  132nd  Street, 
where  the  railroad  structure  crosses  the  easterly 
line  of  the  avenue,  is  4.44  miles  and  that  on  this 
stretch  there  are  4 tracks,  the  length  of  the  four 
tracks  being,  of  course,  4 times  4.44  (fol.  338). 

The  length  of  the  track  used  under  its  trackage 
rights  by  the  New  York,  New  Haven  and  Hart- 
ford Eailroad  Company  is  12.33  to  the  south  line 
of  45th  Street.  Including  the  space  between  the 
South  line  of  45th  Street  and  the  stub  ends  of  the 
tracks  in  the  Grand  Central  Station,  which  are 
on  privately  owned  real  estate,  the  distance  is 
12.43  miles  (fols.  350,  377). 

It  was  further  shown  that  from  the  south  line  of 
45th  Street  to  the  Boston  & Albany  connection  at 
Chatham  with  the  Harlem  Eailroad  it  was  127.34 
miles.  There  are  47. GO  miles  of  second  track, 
12.92  miles  of  third  track  and  12.44  miles  of 
fourth  track  between  the  same  points.  On  the 
Port  Morris  Branch  there  are  1.84  miles  of  single 
track;  on  the  Lake  ^lahopac  Branch  7.22  miles. 
On  the  Port  Morris  Branch  there  are  ()A4  miles 
of  siding  and  on  the  Lake  Mahoi)ac  Branch  1.45 
miles.  The  total  mileage  of  all  tracks  of  the  Har- 
lem steam  line  amounts  to  308.57  miles  (fols.  3G5 
to  371). 


140 


It  tlins  appears  conclusively  that  the  alleged 
special  franchise  is  a small  segment  of  the  steam 
railroad  proper  of  the  New  York  and  Harlem 
Railroad. 

As  we  have  already  pointed  out,  the  general 
method  of  the  Tax  Commissioners  in  valuing  spe- 
cial franchises  in  the  City  of  New  York  was  to 
take  a percentage,  not  exceeding  five,  of  the  gross 
earnings  of  a given  special  franchise,  provided 
there  were  any  net  earnings,  the  amount  of  the 
percentage  depending  upon  the  extent  of  the  net 
eaimings,  or  on  evidence  showing  that  if  properly 
managed  there  would  or  should  be  net  earnings 
(fols.  409  to  419),  but  if  the  gross  earnings  were 
equalled  or  exceeded  by  the  operating  expenses 
there  would  be  no  value  to  the  intangible  element 
(fob  422). 

The  Tax  Commissioners  having  neither  the 
gross  nor  the  net  earnings  of  the  alleged  special 
franchise  in  Park  Avenue  had  really  no  evidence, 
at  least  beyond  the  physical  fact  that  a large 
traffic  daily  passed  over  the  railroad  tracks  in 
question,  and  led  into  an  important  railroad  pas- 
senger terminal,  upon  which  to  fix  a value,  but 
simply  assumed  that  the  intangible  element  was 
at  least  equal  to  the  value  they  found  for  the 
tangible  property. 

The  relator  has  endeavored  to  present  the  gross 
earnings  and  operating  expenses,  of  this  alleged 
special  franchise,  and  the  assessed  value  of  the 
privately  owned  real  estate  not  in  Park  Avenue 
which  is  necessarily  used  in  the  operation  of  the 
alleged  special  franchise.  All  the  facts  are  given 
n})on  which  either  a gross  earnings,  or  net  earn- 
ings, theory  of  the  intangible  element  can  be  con- 
structed. In  view  of  the  testimony  of  the  Tax 
Commissioners  as  to  the  method  generally  fol- 
lowed by  them  in  assessing  special  franchises  in 


141 


Xew  York  City,  we  do  not  think  there  is  any  sub- 
stantial ditlerence  between  the  theory  adopted  by 
them  and  the  so-called  “net  earnings  theory” 
which  has  been  so  thoroughly  worked  out  in  the 
Jamaica  Water  Supply  Company  case,  the  Third 
Avenue  Railroad  case,  the  Manhattan  Railway 
Company  ease  and  other  cases. 

There  might  be  this  difference  in  the  result 
reached,  viz.,  that  if  the  commissioners  took  5 per 
cent,  of  the  gross  earnings  of  a special  franchise 
which  was  making  substantial  net  earnings,  their 
assessment  would  necessarily  be  larger  than  they 
would  obtain  by  taking  5 per  cent,  of  the  net  earn- 
ings after  making  the  deductions  authorized  by 
the  Court  of  Appeals  in  the  Jamaica  Water  Sup- 
ply Company  case,  and  capitalizing  it  by  dividing 
it  by  the  tax  rate  for  New  York  County.  Upon 
the  figures  presented  by  the  relator,  whether  you 
apply  to  the  figures  the  theory  of  valuation  used 
by  the  Tax  Commissioners,  or  the  net  earnings 
theory,  in  either  case  it  is  demonstrated  that  the 
intangible  element  is  without  substantial  value. 

This  brings  us  to  a discussion,  deemed  ap])ro- 
ftriate  at  this  point,  of  the  l)asis  adopted  by  the 
relator  in  presenting  the  figures  showing  the 
gross  earnings  and  opei’ating  expenses. 

It  is  obvious  that  the  stretch  of  railroad  in 
question  is  sinpdy  a segment  connecting  the  New 
York  City  passenger  terminal  with  other  portions 
of  the  system,  d'his  segment  of  connectiTig  track 
is  also  used  under  a trackage  agreement  l)y  the 
New  York,  New  Haven  and  Hartford  Railroad 
Comininy,  which  comi)any  us(!S  the  tracks  of  the 
New  ^'ork  and  Harlem  Railroad  Co)n))any  from 
Woodlawn  into  the  Hi’and  Central  Tcnniinal,  a dis- 
tance of  apin’o.ximately  12.4.')  miles,  and  pays  a 
fixed  and  ascertained  price,  derived  fi’oni  the  ele- 
ments set  forth  in  the  trackage  agreement  1‘or  the 
privileges  enjoyed. 


The  segment  of  track  itself,  separately  consid- 
ered, begins  just  north  of  the  Grand  Central  Sta- 
tion, and  terminates  at  a point  where  the  tracks 
leave  Park  Avenue  above  132nd  Street,  crossing 
private  property  of  the  railroad  company,  and 
then  over  the  Harlem  bridge.  There  is  hut  one 
station  on  this  segment  of  track,  viz.,  at  125th 
Street.  It  is  obviously  true  that  no  function  of 
the  railroad  company  as  a common  carrier  is  com- 
menced and  completed  upon  this  segment  of  track, 
or,  otherwise  expressed,  no  single  i)asseuger,  or 
piece  of  baggage,  or  express  parcel,  or  mail  pack- 
age, is  transported  wholly  within  the  limits  of 
this  segment  of  track,  so  that  the  transportation 
commences  and  ends  within  the  limits  of  the  seg- 
ment, bnt  each  act  of  transportation  covers  other 
portions  of  an  extensive  railroad  which  does  not 
constitute  a special  franchise. 

Below  the  south  line  of  45th  Street  the  tracks 
are  on  private  property  of  the  company,  the  bed 
of  Park  Avenue  having  been  conveyed  by  the 
city  to  the  company  under  Chapter  919,  Laws  of 
1869. 

The  analysis  of  this  case  is,  therefore,  attended 
by  a difficulty  which  does  not  exist  with  reference 
io  the  ordinary  special  franchise  connected  with  a 
street  surface  line  constructed  wholly  within  the 
limits  of  a town  or  city,  and  wholly  upon  admit- 
tedly })ublic  streets. 

It  is,  therefore,  a])parent  that  the  alleged  spe- 
cial franchise  in  Park  xVvenue  considered  by  itself 
yields  no  earnings  at  all.  Such  earnings  as  can  be 
])redieated  of  it  must  be  made  in  connection  with 
trans])ortation  over  railroads  not  constituting  a 
special  franchise.  Its  sole  earnings  are,  there- 
fore, proi)ortionate,  and  must  be  arrived  at  by 
calculation. 


143 


The  learned  Referee  in  his  opinion  (folio  2192) 
very  frankly  recognizes  that  although  the  relator 
complied  precisely  with  the  requisition  in  the  way 
of  information  made  upon  it  by  the  Tax  Commis- 
sioners, the  information  which  it  supplied  did  not 
afford  any  basis  for  valuation  of  the  intangible 
element  in  the  alleged  special  franchise;  that  the 
Tax  Commissioners  had  in  fact  no  relevant  in- 
formation, and  that  the  valuation  which  they  fixed 
upon  the  intangible  element  was  in  substance  a 
mere  haphazard  guess.  lie  further  recognizes 
“that  neither  the  return  of  the  State  Board  of 
Tax  Commissioners,  nor  the  amended  return,  con- 
tains what  the  Court  of  Appeals  in  the  Jamaica 
Water  Company  case  (196  X.  Y.,  39)  said  it 
should  contain — it  does  not  tell  the  Court  how  the 
assessing  officers  got  at  their  valuation — that  is, 
the  modus  operuudi  leading  to  the  result.  The 
effect  of  this  omission  is  to  com[)el  the  Court  to 
take  uj)  and  fix  such  valuation  de  novo.  People 
ex  rel  Bryan  vs  Tax  Commissioners,  N.  Y.  Law 
Journal,  April  27th,  1910”  (fol.  2187). 

He  then  draws  attention  to  the  well-established 
rule  that  in  all  cases  of  assessment  for  purposes 
of  taxation  it  is  to  be  assumed  that  the  valuation 
of  the  si)ecial  franchise  fixed  by  the  State  Board 
is  correct,  and  that  the  burden  of  proof  rests  ui)on 
the  relator  who  attacks  the  assessment  to  show 
that  the  method  by  which  the  assessors  arrived  at 
the  result  is  incorrect,  if  they  had  any  method, 
and  that  the  assessment  does  in  fact  exceed  the 
fair  value  of  the  property  assessed. 

With  this  general  statement  as  to  the  burden 
of  proof  we  do  not,  and  cannot,  take  issue. 

It  is,  however,  we  submit,  subject  to  some  limi- 
tation. We  thiid<  that  under  the  conditions  stated 
a party  attacking  the  assessment  may,  at  least, 


I 


144 

make  out  so  good  a case  priina  facie  as  to  shift 
the  burden  of  proof. 

If  the  State  Board  fails  to  give  an  intelligent 
method  for  fixing  the  assessment,  and  if  the  un- 
disputed testimony  of  the  members  of  the  Board 
is  that  they  had  no  method,  then  we  submit  that 
any  theory  of  estimating  the  value  of  the  intan- 
gible rights  of  the  relator,  which  is  presented  by 
the  relator,  which  is  intelligent,  and  is  shown  with 
anything  approaching  a reasonable  degree  of 
certainty,  is  ample  and  sufficient  to  overcome  the 
mere  presumption  of  correctness  which  at  most 
is  all  that  attaches  to  the  act  of  the  State  Board 
in  making  the  valuation. 

A study  of  the  case  of  People  ex  rel  A.  S B.  T. 
Road  vs  Selkirk  (180  N.  Y.,  at  ])ages  407  to  410, 
inc.),  will  throw  a good  deal  of  light  upon  this 
l)hase  of  the  discussion.  In  this  case  it  was  dis- 
closed that  the  assessing  officers  had,  and  showed, 
no  method,  or  modus  operandi,  by  which  the  val- 
uation of  $20,000  upon  the  plank  road  in  question 
was  arrived  at,  it  being  conceded  that  the  Plank 
Boad  Company,  the  relator,  had  no  title  whatever 
in  the  land  comprising  the  road. 

Judge  O’Brien,  in  a concurring  opinion,  at 
])ages  409-410,  uses  this  significant  language: 

“Whatever  right  the  relator  had  in  this 
highway  is  not  land  in  any  legal  or  proper 
sense  of  the  word,  and  it  is  wholly  incapa- 
ble of  any  valuation  by  any  })rineiple  of  val- 
uation known  to  the  law.  It  is  impossible  to 
conceive  of  such  a thing  as  an  assessment 
ui)on  land  where  there  is  no  known  rule  by 
which  its  value  can  be  ascertained.  * * * 

If  the  assessors  had  assessed  this  road 
against  the  relator  for  one  hundred  thousand 
dollars  instead  of  twenty  thousand  dollars, 
the  larger  assessment  would  be  just  as  good 


145 


as  tlie  smaller  one.  How  can  the  relator  re- 
view such  an  assessment  by  certiorari?  How 
is  the  interest  assessed,  whatever  it  may  be, 
open  to  any  contest  as  to  valuation?  The 
plain  truth  is  that  the  relator  would  be  per- 
fectly helpless  and  without  any  remedy,  ex- 
cept the  arbitrary  discretion  of  the  assessors. 
They  ivould  have  no  more  remedy  to  contest 
the  larger  assessment  tlmn  they  have  to  con- 
test the  present  one.  They  could  not  call  wit- 
nesses to  prove  the  value  of  land  on  the  line 
of  this  road  since  that  would  be  no  evidence 
as  to  the  value  of  the  right  which  it  is  said  the 
relator  has,  independent  of  the  fee  and  of 
the  franchise.”  (Italics  ours.) 

In  the  Illinois  Central  Bailroad  ease  (27  Illi- 
nois, 64),  the  Court  says: 

“If  the  property  is  devoted  to  the  use  for 
which  it  was  designed  and  is  in  a condition 
to  i)roduce  its  maximum  income  one  very  im- 
l)ortant  element  for  ascertaining  its  present 
value  is  discovered,  and  that  is  its  net 
profits.  ’ ’ 

Railroads  are  not  luxuries,  and  they  are  onl)^ 
valuable  when  they  have  fully  demonstrated  their 
power  to  produce  an  income  to  their  owners  over 
and  above  the  cost  of  operation.  If  the  rights  of 
the  relator  in  Park  Avenue  do  not  constitute  a 
special  franchise,  then  there  is  an  end  to  this  liti- 
gation. If  they  do,  then  that  si)ecial  franchise  is, 
within  the  definition  of  the  franchise  tax  law, 
land,  and  the  contention  of  the  relator  that  in  the 
absence  of  any  evidence,  or  record,  i)roduced  by 
the.se  defendants  as  to  how  the  State  P>oard  ar- 
rived at  a valuation  of  over  five  millions  of  dol- 
lars for  the  intangible,  the  relator’s  uncontra- 


14G 


dieted  evidence  that  it  made  no  net  earnings  and, 
therefore,  the  intangible  rights  have  no  taxable 
value,  should  surely  prevail. 

The  learned  Eeferee,  however,  is  apparently  of 
the  opinion  that  the  method  adopted  by  the  re- 
lator of  presenting  the  gross  earnings  of  this 
stretch  of  track  by  giving  the  mileage  proportion 
of  its  earnings  is  not  a proper  method  of  getting 
at  the  value  of  the  intangible  element,  notwith- 
standing that  the  commissioners  themselves  tes- 
tified that  their  exclusive  method  in  the  County 
of  New  York  was  to  take  a percentage  of  the 
gross  earnings,  not  exceeding  five,  and  capitaliz- 
ing it  by  dividing  it  by  the  tax  rate  for  the  year 
in  question,  the  quotient  being  the  valuation  of 
the  intangible  element  (fob  2192). 

The  learned  Referee  apparently  has  ignored 
the  well-settled  rule  that  where  the  property  to 
])e  assessed  is  a segment  of  the  entire  property, 
the  mileage  proportion  is  not  only  the  just  and 
equitable,  but  the  only  practicable  rule  that  can 
be  applied.  Thus  in  Cleveland,  etc.,  Ry.  Co.  vs. 
Radius  (154  U.  S.,  439)  the  rule  is  thus  stated 
(p.  444): 

“Now,  when  a road  runs  into  two  states 
each  state  is  entitled  to  consider  as  within  its 
territorial  jurisdiction  and  subject  to  the 
burdens  of  its  taxes  what  may  perhaps  not 
inaccurately  be  described  as  the  })roportion- 
ate  share  of  the  value  flowing  from  the  opera- 
tion of  the  entire  mileage  as  a single  contin- 
uous road.  It  is  not  bound  to  enter  upon  a 
disintegration  of  values  and  attempt  to  ex- 
tract from  the  total  value  of  the  entire  prop- 
erty that  which  would  exist  if  the  miles  of 
road  within  the  State  were  operated  sei)a- 
rately.  Take  the  case  of  a railroad  running 


U7 

from  Columbus,  Ohio,  to  Indianapolis,  Indi- 
ana. Whatever  of  value  there  may  be  re- 
sulting from  the  continuous  operation  of  that 
road  is  partly  attributable  to  the  portion  of 
the  road  in  Indiana  and  partly  to  that  in 
Ohio,  and  each  State  has  an  ecjnal  right  to 
reach  after  a just  proi)ortion  of  that  value, 
and  subject  it  to  its  taxing  processes.  The 
question  is,  how  can  equity  be  secured  be- 
tween the  States,  and  to  that  a division  of 
the  value  of  the  entire  property  upon  the 
mileage  basis  is  the  legitimate  answer.  Tak- 
ing a mileage  share  of  that  in  Indiana  is  not 
taxing  property  outside  of  the  State.” 

It  is  true  that  this  case  and  others  in  the  Fed- 
eral Supreme  Court  have  for  the  most  part  had 
to  do  with  segments  of  a railroad,  or  telegraph 
line,  or  express  company  within  a particular  state, 
but  it  is  submitted  that  the  principle  is  the  same, 
whether  it  be  applied  to  a trunk  line  extending 
over  several  states,  or  to  a railroad  extending 
through  many  counties  of  the  state,  or  over  many 
separate  taxing  districts. 

See  also: 

State  Railroad  Tax  Cases,  92  U.  S.,  575. 

Pittsburg,  etc..  It.  K.  Co.  vs.  Backus, 
154  U.  S.,  421. 

Western  Union  Telegraph  Co.  vs.  i\Iass., 
125  U.  S.,  5.30. 

Pullman  Car  Conq)anv  vs.  Pennsvivania, 
141U.  S.,  18. 

Adams  Fxpress  Compaiiy  vs.  Ohio,  105 
U.  S.,  194. 

Fargo  vs.  Hart,  19.3  U.  S.,  490. 

See  also  recent  decision  in  West  Shore.  Railroad 
vs.  State  Roard  of  Assessors,  New  Jersey  Sn- 
I>reme  Court,  June  Term,  1911,  opinion  by 
Swayze,  J.  (81  Atlantic  Reporter,  p.  .351). 


148 


Tlie  learned  Referee  was  of  the  opinion  that 
the  relator  should  have  produced  “expert  rail- 
road operators  and  statisticians  who  could  tell 
the  Court  what  the  value  of  such  a franchise  is 
over  and  above  anythin^  properly  chargeable 
thereto”  (fob  2222). 

This  suggested  course  was  precisely  what  the 
relator  attempted  to  do  in  the  Buffalo  Franchise 
Tax  cases.  An  expert  was  produced,  sworn  and 
qualified  to  give  the  value  of  the  alleged  franchise 
right  of  the  railroad  company  to  cross  certain 
public  streets  in  the  City  of  Buffalo.  It  was  easily 
seen  that  the  proportionate  mileage  earnings  of 
the  brief  segment  of  a railroad  which  crosses  a 
l)ublic  street  would  certainly  be  of  much  less  sig- 
nificance in  getting  at  the  value  of  the  intangible 
element  than  in  the  case  of  Park  Avenue,  where 
the  occupation  is  longitudinal  and  some  4.44  miles 
in  length.  If  the  learned  Referee  in  the  case  at 
bar  is  correct,  then  the  propriety  of  producing 
opinion  evidence  in  the  Buffalo  Franchise  Tax 
cases  was  much  more  apparent  than  in  the  case 
at  bar.  In  the  Buffalo  cases  the  relator  offered 
to  prove  before  the  Referee  by  experts,  whose 
competency  was  either  not  (]uestioned,  or  was  con- 
ceded, the  value  of  certain  of  its  alleged  special 
franchises.  The  proof  was  excluded  on  the  ground 
that  opinion  evidence  was  not  com])etent  on  the 
question,  it  being  the  very  question  before  the 
Court  to  be  determined  by  the  Court.  To  which 
relator’s  exceptions  were  duly  taken.  (See  Vol- 
ume 2 of  the  Record  in  the  Buffalo  cases,  folios 
235,  244,  2G0,  261,  262,  263,  271,  272.)  The  relator 
urged  its  exception  (Brief  Point  V.)  to  this  ruling 
unsuccessfully  both  at  S])ecial  Term  and  in  this 
Court,  and  finally  in  the  Court  of  A])])eals.  Ppo- 
plc  ex  rel.  V.  Y.  C.  d-  II.  E.  E.  E.  Co.  vs.  State 


349 


Board  of  Tax  Commissioners  (203  X.  Y.^  at  p. 
180). 

The  Court  of  Ai)i)eals  disposes  of  this,  and 
other  questions  argued,  other  than  those  dis- 
cussed in  the  opinion,  with  this  sweeping  state- 
ment : 


“All  of  the  other  contentions  of  the  re- 
lator, after  due  consideration,  are  overruled 
without  discussion.” 

We  must  assume  that  the  ruling  excluding  opin- 
ion evidence  of  the  value  of  special  franchises  is 
correct  beyond  further  disputation.  If  the 
learned  Referee  in  the  case  at  bar  is  right,  and 
it  is  not  possible  to  show  the  value  of  this  special 
franchi.se  by  its  earnings  based  on  the  mileage 
proi)ortion,  then  indeed  the  situation  of  this  re- 
lator is  a difficult  one.  Confessedly,  the  Tax  Com- 
missioners here  followed  no  method,  used  no 
facts,  applied  no  theory,  merelj^  “assumed”  the 
value  of  the  intangible  element.  They  might  just 
as  well  have  assumed  that  the  value  of  this  intan- 
gible element  instead  of  al)out  five  million,  two 
hundred  thousand  dollars  was  fifty-two  million 
dollars,  or  five  hundred  and  twenty  million  dol- 
lars; it  would  be  just  as  imjiossible  for  the  re- 
lator, according  to  the  view  of  the  learned  Ref- 
eree, successfully  to  sustain  the  burden  of  proof 
in  attacking  such  assessment,  as  in  the  ea?  e at  bar. 

We  submit  that  the  views  of  the  learned  Ai)])el- 
late  Division  would  a])parently  justify  the  Tax 
Commissioners  to  fix  any  arbitrary  assessment,  no 
matter  how  great  the  value  of  the  intangible  eh*- 
ment,  and  by  not  disclosing  the  basis  of  valuation 
render  it  al)Solutely  im])OSsible  for  this  relator,  or 
any  relator  similarly  situated,  to  secure  a review 
by  the  court.  Mr.  Justice  Kellogg  says  (fol. 

2.V)9o): 


150 


“Tlie  situation  of  the  road,  the  condition  of 
the  street,  the  business  passing  over  it,  the 
advantage  to  the  company,  the  detriment  to 
the  public,  its  particular  locality  and  many 
circumstances  may  properly  be  taken  into 
consideration  in  determining  the  value.  There 
is  nothing  in  the  record  which  indicates  that 
the  valuation  is  excessive.” 

If  the  Tax  Commissioners  have  so  broad  a char- 
ter as  this,  we  submit  that  nothing  could  be  put 
in  any  record  that  would  enable  the  court  to  re- 
\ iew  the  finding  of  the  Tax  Commissioners- — they 
might  put  it  on  any  one  of  half  a dozen  different 
theories  of  assessment  or  of  any  combination  of 
them.  In  this  case  it  is  admitted  by  the  Commis- 
sioners themselves  that  they  had  no  theory.  It  is 
obvious,  therefore,  that  no  matter  what  line  of 
testimony  the  relator  might  have  adduced  or  how 
many  different  lines  of  testimony  on  wholly  con- 
flicting theories,  it  could  still  be  said  that  there 
were  ‘‘many  circumstances”  to  be  taken  into  ac- 
count, so  that  it  could  always  be  affirmed  upon  the 
theory  of  the  learned  Appellate  Division  that  the 
relator  had  not  and,  in  the  very  nature  of  things, 
could,  under  no  circumstances,  sustain  the  burden 
of  proof  of  showing  that  the  valuation  of  the  in- 
tangible element  was  excessive.  If  we  are  to  con- 
tinue ill  this  country  a government  of  laws  and 
not  substitute  one  of  men,  it  is  evident  that  some 
method  of  testing  and  reviewing  the  assessments 
of  the  State  Board  of  Tax  Commissioners  must  be 
evolved  and  sanctioned  by  the  courts.  So  long  as 
the  Commissioners  testified  that  the  earnings 
theory  was  the  one  they  deemed  applicable  to  all 
si)ecial  franchises  in  New  York  County,  we  do 
not  see  why  it  should  not  be  i)ro])erly  a])pli(HJ 
here. 


The  ordinary  and  usual  method  of  arriving  at 
the  earnings  of  a given  stretch  of  track,  vhether 
between  given  terminals,  or,  as  here,  beginning, 
in  a railroad  sense,  at  nowhere  and  ending  no- 
where, is  on  the  mileage  basis  (p.  179,  fol.  536). 
This  is  the  basis  adopted  by  the  relator,  and  its 
figures  are  based  on  the  proposition  that  for  the 
transportation  of  a passenger,  say,  between  New 
York  and  Buffalo,  the  stretch  of  track  in  question 
constituting  the  alleged  special  franchise  earns 
precisely  that  proportion  of  the  fare  paid  as  the 
length  of  the  track  within  the  alleged  special  fran- 
chise bears  to  the  length  of  the  railroad  between 
New  York  and  Buffalo.  Considerable  effort  was 
made  on  the  part  of  the  counsel  for  the  defendants 
to  i^rove  the  existence  of  a so-called  “arbitrary” 
with  reference  to  the  alleged  special  franchise  in 
Park  Avenue.  That  is  to  say,  it  was  suggested 
that  the  relator  exacted  an  extra  fare,  or  an  ad- 
dition to  the  fare,  by  reason  of  the  use  of  this  en- 
trance into  the  Grand  Central  Terminal.  This 
effort  failed  (p.  176,  fol.  528).  Mr.  JIarry  E. 
Coale,  the  chief  rate  clerk  of  the  Passenger  De- 
imrtment  of  the  relator,  was  examined  at  length 
with  reference  to  the  subject  under  his  charge, 
namely,  the  jireparation  of  ijasseng(‘r  fare  sched- 
ules and  the  division  of  passenger  n'venues  so 
far  as  it  relates  to  the  sale  of  tickets  between  con- 
necting carriers. 

The  witness  testified  (p.  313,  fol.  i)37)  that  tick- 
ets were  charged  for  strictly  on  the  mileage  basi 
for  passengers  traveling  over  tlie  alleged  special 
franchise  in  Park  Avenue,  and  that  no  additional 
amount,  known  as  an  “arbitrary,”  was  cliarged. 
When  asked  to  ex])lain  what  he  meant  by  tin*  term 
“arbitrary”  in  tin*  division  of  laissenger  revenue, 
be  said  (f;.  318,fol.  952) : 


152 


“Between  points  where  a transfer  is  in- 
volved and  in  some  cases,  where  they  have 
bridges  that  have  been  very  expensive  to  l)e 
put  up,  arbitraries  are  exacted.  In  certain 
points  in  Michigan  the  Compendium  is  full 
of  arbitraries  wliere  a stage  service  or  wagon 
transfer  is  necessary  to  convey  a passenger 
from  one  depot  to  another,  and  the  arbitrary 
as  a rule  is  taken  out.” 

After  pointing  out  other  points,  such  as  the  St. 
Louis  bridge  crossing  the  Mississippi  river,  and 
the  bridge  at  (Quincy  over  the  same  river  (p.  330, 
fols.  990-993),  he  was  asked  (p.  331,  fob  993) : 

“Aside  from  the  arbitraries  to  which  you 
have  testified,  do  you  know  of  any  practice 
among  the  railroads  charging  or  giving  more 
proportionately  by  reason  of  the  fact  that 
their  lines  are  partly  over  very  difficult  and 
expensive  stretches  of  construction? 

A.  No,  sir.” 

He  further  testified  (p.  333,  fob  998)  that  the 
mileage  basis  was  calculated  from  the  Grand  Cen- 
tral Station,  located  between  42nd  and  45th 
Streets. 

With  reference  to  computing  the  income  from 
the  alleged  special  franchise  in  Park  xV venue  the 
defendants’  expert,  Mr.  Jabez  T.  Odell,  was  ex- 
amined. The  substance  of  his  testimony  as  to  the 
proportion  of  earnings  coming  through  the  Park 
Avenue  gateway  will  be  hereafter  discussed,  his 
figures  being  computed  strictly  ou  the  mileage 
basis.  xVs  Mr.  Odell’s  own  presentation  of  the 
earnings  claimed  to  have  been  made  through  the 
Park  Avenue  gateway  are  based  ui)on  the  most 
tenuous  averages  taken  from  the  oi)eration  of  the 
entire  svstem  of  relator’s  railroad  with  oidv  a 


103 


remote  approximation  to  the  actual  figures,  his 
criticism  of  the  relator’s  presentation  is -not  with- 
out humor.  In  his  serious  moments,  Mr.  Odell 
is  e\udently  convinced  that  the  crossings  and  op- 
erating expenses  of  this  stretch  of  track  are  not 
susceptible  of  demonstration.  They  must  be  com- 
puted. 

In  his  direct  examination,  in  answer  to  counsel 
for  the  defendants,  he  criticised  the  method 
adopted  by  the  relator  as  not  a proper  one.  "When 
asked  to  tell  why,  he  said  (p.  465,  fol.  1393)  : 
“They  were  treating  this  4.44  mile  of  track  as 
a part  of  the  mileage  of  the  New  York  Central 
System  in  New  York  State  instead  of  treating  it 
per  se. — that  is,  by  itself.’’ 

“Q.  That  is  you  mean  to  say  they  were  dis- 
tributing the  earnings  made  by  this  franchise, 
or  track  in  Cjuestion,  over  the  2,000  miles  of 
track,  and  thus  thinning  the  earnings  per 
mile? 

A.  Yes,  sir.’’ 

Of  course,  it  is  a question  whether  or  not  this 
method  resulted  in  “thinning  the  earnings.”  We 
shall  show  that  it  resulted  in  making  them  larger 
than  they  would  otherwise  have  been.  The  wit- 
ness was  then  asked  (fol.  1394) : 

“Q.  What,  in  your  opinion,  is  the  proper 
method  to  apportion  this  in  order  to  arrive  at 
the  gross  eamings  of  this  stretch  of  track  in 
question  ? 

A.  The  only  way  to  arrive  at  the  value  of 
this  track  in  rpiestion  is  to  find  out  the  busi- 
ness that  passes  over  it,  and  the  earnings 
accruing  to  it.” 

If  the  last  answer  of  this  witness  is  to  be  taken 
literally,  it  will  be  im[)ossible  to  show  that  the 


154 


stretch  of  track  in  question  earned  anything  at 
all.  That  the  witness  did  not  mean  this,  is  shown 
by  his  answer  to  questions  on  cross-examination. 

Asked  as  to  his  previous  experience  in  comput- 
ing the  earnings  of  any  similar  stretch  of  track 
beginning  at  an  arbitrary  point  between  stations, 
and  ending  at  an  arbitrary  point  between  sta- 
tions, he  replied  (p.  486,  fob  1458) : 

“I  have  had  experience  in  estimating  the 
earnings  per  mile  of  road  on  various  rail- 
roads after  certain  improvements  have  been 
made,  but  never  referred  to  the  mileage  ex- 
cept as  a unit,  one  mile  with  another.” 

“Q.  That  is  you  compared  one  mile  with 
another  and  compared  one  mile  the  same  as 
another? 

A.  Yes,  sir. 

(^.  Then  I understand  your  answer  to  my 
question  is  that  you  have  never  had  just  this 
same  situation  to  cope  with  before? 

A.  I never  did  have;  no,  sir.” 

Again,  on  page  493,  fob  1478,  the  witness  was 
asked : 

“Q.  Now,  coming  to  your  testimony  in 
which  you  stated  that  in  your  judgment  the 
earnings  from  this  stretch  of  track  were  not 
in-o])erly  computed  by  the  relator.  I under- 
stand your  opinion  to  he  that  the  actual  earn- 
ings should  he  ascertained? 

A.  Yes,  sir.” 

This  question  was  put  to  the  witness,  on  i)age 
494,  at  fob  1480: 

“Q.  Sup[)ose  that  on  the  first  day  of  Janu- 
ary there  are  50  passengers  embark  from  the 
Grand  Central  Station  and  go  to  Tarry  town, 
and  their  fare  is  sold  and  collected  on  the 


155 

train.  Xow,  to  get  at  the  earnings  of  this 
particular  section — this  4.44  miles  af  track — 
out  of  a journey  from  the  Grand  Central  Sta- 
tion to  Tarrytown,  you  would  have  to  com- 
pute that  on  a mileage  basis  ? 

A.  The  average  mileage. 

Q.  And  there  is  no  other  way  ? 

A.  No,  sir.” 

We  submit,  therefore,  that  it  is  established  by 
the  evidence  of  the  defendants,  as  well  as  by  the 
evidence  of  the  relator,  that  the  only  method  in 
which  the  earnings  from  this  alleged  special  fran- 
chise can  be  ascertained  is  the  mileage  basis. 

If,  in  making  this  computation,  the  earnings 
from  every  individual  passenger  carried  over  this 
stretch  of  track  in  and  out  of  the  Grand  Central 
Station,  and  going  north  from  the  125th  Street 
Station,  for  the  year  ending  December  31,  1899, 
had  been  apportioned  so  that  the  proportionate 
amount  earned  by  this  stretch  of  track  out  of 
every  journey  by  taking  the  ratio  of  the  4.44  miles 
to  the  entire  length  of  the  journey,  an  impractica- 
ble task  would  have  l>een  involved  (p.  172,  fob 
515).  It  would  have  taken  the  efforts  of  a small 
army  of  clerks  and  accountants  extending  over 
many  months  (p.  178,  fob  533). 

A substituted  method  was  emi)loyed  which  was 
practicable,  and  so  far  as  results  went  produced 
aj^proximately  the  same  figures,  or  a larger  result 
if  anything  (fob  533).  If  there  was  a difference 
it  was  against  the  relator,  and  for  this  reason : 
The  rate  charged  on  the  Hudson  Division  betw<‘<*n 
New  York  and  Albany,  formerly  the  old  Hudson 
Kiver  Railroad,  and  on  the  Harlem  Division,  is  a 
trifle  over  2 cents  a mile.  On  the  main  line,  be- 
twcMUi  Albany  and  Buffalo,  tlie  rate*  is  fixed  by 
statute  at  not  to  exceed  2 cents  per  mile;  on  other 


156 


portions  of  the  New  York  Central  system,  such  as 
the  R.  W.  & 0.  Division,  occupying  the  northerly 
section  of  the  State,  the  M.  & M.  Division,  ex- 
tending through  the  Adironclacks,  and  the  Penn- 
sylvania Division,  running  south  from  Lyons,  the 
rate  is  only  limited  hy  the  general  railroad  act, 
that  is  to  say,  an  amount  not  exceeding  3 cei^ts 
per  mile,  and  this  rate  is  usually  charged  (p.  177, 
foi.  530).  If,  then,  the  general  average  per  mile 
from  the  whole  system  be  taken  with  so  many  3 
cents  per  mile  fares  entering  into  it,  it  is  obvious 
that  the  general  average  of  the  income  per  passen- 
ger per  mile  would  l)e  greater  than  if  the  income 
were  confined  to  the  Hudson  and  Harlem  Divi- 
sions and  the  main  line  where  the  rate  is  substan- 
tially 2 cents,  or  a small  fraction  above  2 cents, 
per  mile.  As  the  great  bulk  of  the  commutation 
business  is  done  in  and  out  of  the  Grand  Central 
station  the  general  average  per  mile  per  commu- 
tation passenger  cannot  vary  perceptibl}"  from  the 
actual  average  (p.  184,  fob  551). 

Mr.  Odell’s  attention  was  drawn  to  this  circum- 
stance. He  was  asked  (page  496,  fob  1488) : 

“Q.  So  far  as  the  general  average  per  pas- 
senger per  mile  includes  earnings  in  the 
3-cent  zone,  it  would  tend  to  be  a larger  aver- 
age than  the  passenger  per  mile  earnings  on 
the  Harlem  & Hudson  River  Divisions,  where 
the  rate  is  in  all  cases  below  3 cents  a mile? 

A.  It  certainly  would.” 

We  think,  therefore,  that  a sufficient  basis  has 
been  laid,  as  shown  by  the  evidence,  for  the  coin- 
])utation  of  the  earnings  on  the  mileage  basis  pro- 
duced and  sworn  to  by  Mr.  Foulds,  Chief  Clerk 
in  the  Auditor’s  office. 

Mr.  Foulds  prepared  a statement  for  the  fiscal 
year  ending  June  30,  1899,  and  also  for  the  calen- 


157 


(lar  year  ending  December  31,  1899.  The  first 
statement  was  to  compare  with  the  report  filed 
with  the  State  Board  of  Tax  Commissioners,  and 
the  second  to  bring  the  earnings  do^^■n  to  the  near- 
est possible  date  prior  to  the  second  Monday  of 
January,  1900,  as  of  which  date  the  alleged  spe- 
cial franchise  is  supposed  to  be  valued.  The  first 
statement  was  received  in  evidence  and  is  found 
on  pages  146  to  149.  The  statement  for  the  cal- 
endar year  is  found  on  pages  151  to  153.  For 
convenience  of  discussion  the  latter  statement  is 
reproduced  here,  as  follows: 

EXHIBIT  VV. 

Statement  showing  method  of  ascertaining 
GROSS  earnings  OF  THAT  PORTION  OF  THE  NeW 
York  & Harlem  Railroad  in  Park  Avenue 
BETWEEN  45th  StREET  AND  133rD  StREET,  AND 
AMOUNT  OF  SUCH  EARNINGS  FOR  THE  YEAR  END- 
ING December  31,  1899. 


First:  Earnings  from  operation  of  N.  Y.  C.  & 
H.  R.  R.  R.  Co. 


(a)  Passenger  earnings 

Total  passenger  earnings. 
Commutation,  school  and 
family  ticket  earnings.  . 
Earnings  from  single  trip, 
round  trip  and  mileage 

passengers  carried 

Total  number  of  single 
trip,roundtrip  and  mile- 
age passengers  carried. 
Total  number  of  miles 
traveled  by  total  number 
of  passengers  carried.. 


$14,411,527.44 

$845,538.31 

$13,565,989.13 

20,513,3.37 


813,861,466 


158 


Earnings  per  mile  per  ( or- 
dinary) passenger $ .01942 

Total  number  commuta- 
tion passengers  carried.  6,162,950 
Total  number  of  miles 
traveled  by  total  number 
commutation  passengers 

carried 115,218,467. 

Earnings  per  mile  per  com- 
mutation passenger....  $ .00734 

Distance  from  45tli  Street 

to  133rd  Street 4.44  miles 

Number  of  ordinary  pas- 
sengers on  N.  Y.  C. Lines 
at  G.  C.  S.,  going  and 
coming  3,625,046 


Number  of  commutation 
passengers  on  N.  Y.  C. 

Lines  at  G.  C.  S.,  going 

and  coming 4,312,669 

Earnings  from  ordinary 

passengers  $312,568.86 

Earnings  from  commuta- 
tion passengers 140,548.16 


(a)  Total  passenger  earn- 


ings   $453,117.02 

(b)  Mail  earnings: 

Amount  paid  by  Govern- 
ment per  mile  of  road : 

New  York  and  Buffalo 

route  $2,794.14 

New  York  and  Chatham 

route  148.77 

Railway  Mail  Service, 

N.  y'.  to  Buffalo 520.00 


Total  per  mile  of  road.  $3,462.91 


159 


Number  of  miles  of 
track  involved . . . -1.44 
Total  mail  earnings. . . . 

(c)  Express  earnings: 

Total  earnings  on  N. 

Y.  C 

Total  miles  of  railroad 

involved  

Amount  of  earnings .... 

(d)  Excess  bassage : 

Total  earnings  on  N. 

Y.  C 

Total  miles  of  railroad 

involved  

Amount  of  earnings.  . . . 
Second:  Earnings  from 
operation  of  X.  Y.,  N.  H. 

& H.  R.  R.  Co. 

(a)  Passenger  earnings: 

Total  pa^unent  on  pas- 
sengers carried 

Number  of  miles  43rd  St. 

to  Woodlawn  Junction 
Total  passenger  pay- 
ments   

(b)  Mail,  express  and  ex- 
cess baggage 

Total  pa>Tnents 

Recaditul.vtion. 


From  N.  Y.  C.  & II.  R.  R.  Co. 
Passenger  earnings. . . $453,11 

Mail  earnings 15,37i 

Exj)ress  earnings....  2,47' 

Excess  baggage 25: 


$15,375.32 


$1,344,962.17 

2,409.88 

$2,477.98 


$137,069.55 

2,409.88 

$252.54 


$450,480.63 

12.43 

$160,911.78 

25,780.74 

9,208.89 


7.02 

5.32 

r.98 

2.54 


$471,222.H6 


160 


From  N.  Y.,  N.  H.  & H.  R.  R.  Co. 

Passenger  earnings. . . $160,011.78 
Mail,  express  and  bag- 
gage   9,208.89 

$170,120.67 


Grand  total $641,.343.53 

It  appeared  that  in  computing  the  earnings  de- 
rived from  oi)eration  by  The  New  York  Central 
and  Hudson  River  Railroad  Company,  the  relator 
herein,  Mr.  Foulds,  by  inadvertence  omitted  cer- 
tain earnings  of  the  station  at  125th  Street.  These 
were  ascertained,  and  for  the  year  ending  Decem- 
ber 31,  1899,  amounted  to  $3,276.15  (p.  187,  fob 
560).  Adding  this  to  the  total  passenger  earn- 


ings from 

New  York  Central  operation $453,117.02 

Earnings  125th  Street  station. . . . 3,276.15 


Amounts  to $456,393.17 


or  the  total  earnings  for  the  entire  year  including 
earnings  from  all  sources  would  be  $644,619.68 
instead  of  $641,343.53. 

AVe  submit  that  this  theory  of  presenting  earn- 
ings is  a liberal  one  to  the  defendants,  for  the 
reason  that  the  alleged  special  franchise  consid- 
ered by  itself,  and  separately  and  apart  from  the 
railroad  system  in  which  it  is  a connecting  link 
has,  to  say  the  least,  a very  problematical  value ; 
at  least,  that  was  the  testimony  of  the  defendants’ 
expert,  Mr.  Odell  (p.  498,  fol.  1493).  He  further 
testified  that  separate  and  apart  from  the  linos  in 
which  it  was  a link  it  would  not  have  any  value  of 
consequence  (p.  505,  fol.  1515). 

It  is  i)erhaps  proper  at  this  i)oint  to  consider 
the  theory  on  which  the  defendants  claim  the  al- 


161 


leged  special  franchise  to  he  of  great  value.  It 
is,  that  if  the  passenger  terminal,  for  example,  of 
the  Railroad  Compan}'  was  on  the  east  bank  of 
the  Harlem  River,  the  earnings  of  the  entire 
system  from  the  transportation  of  passengers 
would  be  less.  That  is  to  say,  there  would  be 
fewer  people  traveling  between,  for  example, 
Syracuse  and  the  Thousand  Islands,  if  other  pas- 
sengers had  to  stop  at  the  east  bank  of  the  Harlem 
River  in  getting  into  New  York  City.  The  fal- 
lacy of  this  contention  is  apparent  upon  the  mere 
statement  thereof.  It  is  speculative  at  best 
whether  or  not  the  relator’s  passenger  traffic 
would  be  affected  if  its  i)assenger  terminal  was 
on  the  east  bank  of  the  Harlem  River.  Consid- 
ering the  enormous  fixed  charges  and  the  very 
great  expense  attending  the  operation  of  the  rail- 
road in  Park  Avenue  south  of  the  Harlem  River, 
and  the  terminal  at  the  Grand  Central  Station,  it 
is  a very  serious  question  whether  the  net  earn- 
ings of  the  company  would  not  be  greater  if  its 
passenger  terminal  was  on  the  east  bank  of  the 
Harlem  River. 

We  submit,  however,  that  the  underlying  fal- 
lacy of  defendants’  argument  is  predicated  n])on 
the  proi)osition  that  the  alleged  special  francbise 
in  Park  Avenue  should  be  credited  with  the  earn- 
ings of  the  general  franchise  of  the  company. 
For  example,  the  New  York  Central  tracks  run 
through  the  City  of  Syracuse  on  Washington 
Street.  If  the  tracks  in  Washington  Street  slnndd 
be  torn  up  the  railroad  as  an  entity  would  be  de- 
stroyed. So,  it  might  be  argued  the  entire  fran- 
chise value  of  the  railroad  depended  on  maintain- 
ing tracks  in  Washington  Street,  and  it  might  be 
argued  that  the  entire  earnings  of  the  railroad,  at 
least  to  the  extent  that  traffic  )>assed  ovei*  Wash- 
ington Street,  constituted  the  measure  of  the  valiu* 


162 


of  the  special  franchise.  Snch  an  argnment  would 
have  the  same  force  as  to  every  highway  cross- 
ing, with  the  logical  result  that  the  railroad  com- 
ically would  be  assessed  for  the  value  of  special 
franchises  several  thousand  times  more  than  the 
entire  value  of  the  railroad. 

This  is  the  precise  theory  upon  which  the  pre- 
sentation of  Mr.  Odell  was  made,  and  which  will 
be  hereaf{er  examined.  He  attempted  to  sepa- 
rate out  of  the  total  passenger,  mail  and  express 
earnings,  the  portion  thereof  which  passes  over 
Park  Avenue.  For  the  year  1899,  for  example, 
out  of  the  total  receipts  from  passenger,  mail  and 
express,  for  the  entire  system  of  $16,677,136,  he 
arrives  at  $9,672,749  as  the  earnings  of  this  al- 
leged special  franchise.  He  did  not  claim,  of 
course,  that  this  entire  amount  of  $9,672,749  was 
earned  exclusively  upon  the  stretch  of  track  in 
Park  Avenue,  4.44  miles  in  length,  but  his  conten- 
tion apparently  was  that  some  indeterminable 
])ortion  thereof  was  earned  by  reason  of  the  al- 
leged special  franchise.  What  portion  was  not 
determined,  and  in  fact  is  indeterminable,  excejct 
by  taking  the  mileage  proportion.  In  other 
words,  he  would  credit  to  the  special  franchise  in 
Park  Avenue  the  entire  earnings  from  the  general 
franchise  of  the  Company  so  far  as  the  same  were 
derived  from  operation  through  the  Park  Avenue 
gateway. 

The  illegality  and  unfairness  of  this  method  of 
assessment  has  been  condemned  by  the  Court  of 
Apiceals  in  People  ex  rel.  Delaware^  Lachau'auna 
cC  Western  Railroad  Cowpanif  vs.  Clapp  (152  X. 
Y.,  490).  This  case  involved  a local  assessment 
l)laced  upon  about  ly^  miles  of  the  relator’s  road 
running  from  Ttinghamton  to  F>ulfalo,  consist  lag 
of  a double  track,  with  about  3 miles  of  sidetrack. 


163 


■\vitli  three  stations,  water  tanks,  and  one  hnndred 
and  twelve  acres  of  land.  The  i)ro])ert5*  was  as- 
sessed at  $300,000.  The  method  of  arrivino:  at 
the  value  of  the  real  estate  of  the  relator  for  the 
])urpose  of  taxation,  which  was  adopted  by  the 
assessors,  is  thus  stated  hy  them  in  their  return 
to  the  writ  of  certiorari: 

“In  fixing  upon  the  sum  at  which  the  real 
property  was  assessed  we  considered  the 
same  not  as  a separate  piece  of  real  estate 
standing  alone,  hut  as  a part  of  the  extensive 
and  valuable  system  of  railroads  leased  and 
occui)ied  hy  said  relator,  extending  from  the 
City  of  Binghamton  to  the  City  of  Buffalo, 
and  as  a part  of  the  extensive  and  valuable 
system  of  railroads  operated  by  the  relator, 
and  based  our  said  assessment  thereof  upon 
the  cost,  rentals  and  earnings  of  said  railroad 
as  shown  by  the  annual  report  of  said  re- 
lator to  the  board  of  railroad  commissioners 
of  the  State  of  New  York.” 

The  relator  gave  uncontradicted  proof  of  th(> 
cost  of  reproducing  the  tangii)le  ]}roperty  at  a 
sum  considerably  less  than  the  amount  fixed  bv 
that  method  of  assessment,  and  held  that  the  fail’ 
cost  of  rejtroduction  is  the  true  criterion. 

O’Brien,  J.,  says,  at  i)age  : 

“The  principle  of  assessing  a few  miles  of 
railroad  in  a town  according  to  the  i-elations 
wliich  it  is  supposed  to  bear  to  the  whole  of 
a vast  and  intricate  system,  or  to  the  income 
or  earning  f)ower  of  the  entire  system,  draws 
into  the  calculation  so  many  eleinenis  that 
the  process  becomes  too  complex  and  difficult 
for  even  an  expert.”  • • • 


Page  406: 

“That  such  a principle  of  valuation  is  mis- 


164 


leading  and  impossible  of  application  with 
an}"  approach  to  justice  or  accuracy  is  suf- 
ficiently shown  by  what  appears  in  this  rec- 
ord. The  learned  referee,  upon  whose  report 
the  assessment  was  confirmed,  resorted  in  his 
oi)inion  to  a calculation  to  show  the  annual 
rental  of  the  whole  road  per  mile  and  then 
capitalized  that  sum  at  six  per  cent.,  which 
produced  a result  much  larger  even  than  that 
found  by  the  assessors.  He  then  suggested 
that  an  allowance  should  be  made  for  a por- 
tion of  that  rental  since  it  was  to  be  credited 
to  the  use  of  terminal  and  other  property  not 
embraced  in  the  specific  seven  and  one-fourth 
miles  of  railroad,  and  he  then  proceeds  to  re- 
duce his  figures  to  correspond  with  those  of 
the  assessors.  This  shows  that  the  theory 
adopted,  in  order  to  work  at  all,  had  to  be 
supplemented  in  the  end  by  an  arhitrartj  al- 
lowance for  income  that  the  particular  prop- 
erty in  question  had  no  shore  in  producing.” 
(Italics  ours.) 

Of  course,  the  case  cited  must  be  carefully  read 
in  determining  its  application  to  the  case  at  bar. 
In  the  case  cited  there  was  no  special  franchise 
in  the  744  miles  of  track  to  be  valued,  and  there 
was  no  intangible  element.  What  the  Court  of 
Appeals  condemned  was  the  theory  of  crediting 
to  the  particular  stretch  of  track  earnings  which 
had  accrued  to  other  portions  of  tlie  geiieral  sys- 
tem of  the  Delaware,  Lackawanna  & Westein 
liailroad  Comi)any.  If  the  stretch  in  (piestion, 
IVx  miles,  had  been  laid  out  and  constructed  upon 
a public  highway  in  existence  before  the  railroad 
was  built,  and  the  franchise  lax  law  had  then  been 
in  force,  the  situation  there  and  in  the  case  at  bar 
would  have  been  identical  (assuming  a special 
franchise  in  Park  Avenue).  But,  we  submit,  the 
fair  deduction  from  the  oi)inion  of  the  Court  of 


165 


Appeals  in  this  ease  is,  that  each  stretch  of  track 
which  is  subject  to  assessment  is  to  be  credited 
only  with  its  own  earnings,  assuming  the  element 
of  special  franchise  enters. 

It  is  argued  by  the  Referee  and  by  the  resi)ond- 
ents  that  this  stretch  of  track  is  a “business  get- 
ter”; that  travelers  coming  from  Chicago,  for  ex- 
ample, prefer  this  route  to  that  of  the  Pennsyl- 
vania, the  Erie,  or  the  Baltimore  and  Ohio,  be- 
cause it  lands  them  without  water  carriage  in  the 
heart  of  Manhattan  Island;  that  the  same  con- 
siderations apply  to  other  cities  and  towns  served 
also  by  competing  lines.  Assuming  the  truth  of 
this  claim,  is  not  the  greater  volume  of  passenger 
traffic  resulting  exactly  reflected  in  the  number  of 
passengers  carried  over  this  stretch  of  track  in 
Park  Avenue,  as  compared  with  the  number  of 
passengers  that  would  be  carried  if  the  terminal 
was  on  the  east  bank  of  the  Harlem  River  or  on 
the  west  bank  of  the  Hudson?  Our  statement  of 
gross  earnings,  however,  is  based  on  the  exact 
number  of  passengers  that  are  actually  conveyed 
over  this  stretch  of  track.  If  the  rate  of  fare  be- 
tween New  York  and  Chicago  is  the  same  on  high- 
class  roads  operating  fast  trains  (such  as  the 
railroad  of  the  relator  and  that  of  the  Pennsyl- 
vania Company,  p.  332,  fob  1)95),  must  not  the 
assumed  advantage  enjoyed  by  the  relator  neces- 
sarily Ije  measured  l)y  the  larger  volume  of  traffic 
over  the  track  in  Park  Avenue?  What  othei- 
possible  element  of  advantage  is  there? 

If  passengers  pay  the  same  rate  per  mile  (or  a 
less  rate)  for  transportation  over  this  stretch  of 
track  as  over  any  other  e(|ual  stretch  of  track 
o|)eratefl  l»y  relator,  what  ]»ossible  ad\antage  is 
the  Park  Avenue  gateway  to  the  relator  save*  only 
as  such  advantage  is  shown  in  the  volume  of 
traffic? 

The  advantage  and  cf)nvenience  to  the  traveling 


166 


public,  for  wliicli  notliing  additional  is  paid,  seems 
to  be  taken  as  a justification  for  penalizing  the 
relator ! 

The  learned  Referee  and  the  respondents  would 
have  the  Court  enter  into  the  domain  of  pure 
imaginative  speculation,  to  seize  some  fancied 
element  of  advantage  which  is  not  shown  and 
('ould  never  be  shown  in  the  figured  results  of 
operation,  no  matter  what  system  of  accounting 
relator  adopted.  Even  if  such  opinion  evidence 
were  competent,  the  “exi)erts”  which  the  learned 
Referee  seems  to  have  in  mind  could  do  no  more 
than  make  wild  random  guesses  upon  theoretical 
elements  of  valuation  which  exist  only  in  the  imag- 
ination. Brought  down  to  the  realm  of  actuality 
and  confronted  with  actual  figures  of  operation, 
on  cross-examination,  they  would  either  have  to 
adoi)t  the  earnings  as  shown  b}"  relator,  or  fall 
back  on  mere  unsupi)orted  opinion.  In  either 
event  their  views  would  not  aid  the  Court. 

An  examination  of  the  elements  upon  which  the 
statement  or  presentation  of  Mr.  Odell  is  based 
(Appendix,  p.  988,  fob  2962)  will  show  that  dif- 
ferent periods  of  time  have  entered  in  in  such 
a way  as  to  make  his  results  inconclusive  on  any 
basis.  For  example,  to  get  at  the  so-called  local 
passengers  in  and  out  of  the  Grand  Central  Sta- 
tion, and  the  inter-line  passengers  both  this  side 
of,  and  west  of,  the  Niagara  frontier,  he  relies 
upon  a statement  which  was  furnished  by  Mr. 
Foulds  at  the  request  of  counsel  for  the  defend- 
ants, and  is  inserted  at  page  369,  folio  1105.  This 
statement  covers  the  year  ending  December  31, 
1899,  l)ut  for  tbe  commutation,  school  and  family 
ticket  i)assengers  passing  in  and  out  of  the  Grand 
('entral  Station  be  goes  to  the  statement  of  Mr. 
Foulds  at  page  1-17,  folio  441  of  the  record,  whicli 


167 


is  the  statement  for  the  year  ending  June  30,  1899. 
Then  to  get  at  the  passenger  earnings  per  mile  of 
ordinary  passengers,  including  mail  and  express, 
he  takes  the  figures  read  in  evidence  from  the 
company’s  annual  report  for  the  year  ending 
June  30,  1899  (p.  438,  fol.  1312).  Even  though 
there  were  any  force  in  the  method  which  Mr. 
Odell  adopts  in  presenting  his  figures,  the  latter 
taken  from  such  inconsistent  sources  present 
nothing  to  which  any  significance  can  attach. 

We  could  not  obtain  from  Mr.  Odell  any  justi- 
fication satisfactory  to  us  for  jumbling  together 
the  mail  and  express  earnings  with  ordinary  pas- 
senger earnings.  He  admitted  on  cross-examina- 
tion (p.  492,  fol.  1475)  that  the  usual  practice  in 
computing  the  earnings  of  a railroad  is  to  sep- 
arate the  passenger,  mail,  freight  and  exiiress 
earnings.  He  further  testified  (i).  497,  fol.  1489) : 

“Q.  No.  Mr.  Odell,  assuming  that  the 
mail  earnings  are  i)aid  for  by  tlie  federal  gov- 
ernment strictly  on  a mileage  basis,  in  your 
judgment  would  that  be  the  i)roper  method  to 
ascertain  the  earnings  from  tl'e  handling  of 
mail  on  tliis  stretch  of  track?” 

This  question  was  amended  so  as  to  read  “track 
mileage  basis,”  and  the  witness  answered: 

“A.  That  is  the  only  wa)'  to  determine  tlie 
value  of  this  piece  of  track,  to  credit  it  with 
its  proportion  of  the  mail  earnings.” 

And  this  is  the  i)recise  method  followed  by  Mr. 
hMulds  in  j)resenting  his  computation  of  the  pro- 
portionate earnings  of  this  alleged  special  fran- 
chise. He  has  followecl  the  same  method  in  pre- 
senting the  express  and  excess  baggage  (‘ariiings, 
notwithstanding  tin*  fact  that  the  exjiress  (nira- 


168 


ings  are  three  times  larger  over  other  portions 
of  the  system,  for  e-^ample,  ou  the  Mohawk  Divi- 
sion, than  out  of  New  York  (p.  199,  fol.  595). 

The  rental  derived  from  the  New  York,  New 
Haven  ahd  Hartford  Railroad  Company,  for  use 
of  the  tracks  from  Woodlawn  in,  is  treated  on 
the  same  mileage  basis,  and  it  is  difficult  to  per- 
ceive on  what  other  basis  any  logical  presenta- 
tion could  be  made.  The  defendant’s  argument  in 
this  case  is  not  that  the  special  franchise  in  Park 
Avenue  in  and  of  itself  yields  anything,  but  that  it 
forms  a means  of  access  into  the  heart  of  the  city. 
The  same  argument  app*lies  with  just  as  much 
force  to  that  portion  of  the  Harlem  tracks  which 
extend  from  the  Harlem  River  north  to  the  city 
line,  and  the  Spuyten  Duyvil  & Port  Morris  tracks 
which  connect  the  rails  of  the  Hudson  Division. 
These  northerly  tracks  are  within  the  city  limits, 
and  it  is  just  as  necessary  for  trains  to  get  over 
these  stretches  of  track  to  get  into  the  city  as  it 
is  to  go  over  the  tracks  in  Park  Avenue. 

Why,  then,  should  not  the  earnings  either  from 
the  New  York  Central  operation,  or  from  the  New 
Haven  rentals,  he  apportioned  strictly  on  the 
mileage  basis?  For  purposes  of  comparison  we 
have  taken  Mr.  Odell’s  presentation  of  $9,672,749 
as  the  total  earnings  through  the  Park  Avenue 
gateway,  and  apportioned  them  according  to  the 
mileage  of  the  alleged  special  franchise,  to  wit, 
4.44  miles. 

The  elements  and  calculations  are  as  follows: 
Earnings  per  passenger 
mile  as  derived  from  the 
company’s  annual  report 
ending  June  30, 1899 — 

(a)  Ordinary  passengers 
including  mail  and  ex- 
])ress 


$.24(i425 


169 


(b)  Commutation  passen- 
gers (school  and  family 
tickets)  


$.00742 


Xo.  of  ordinary  passengers 


Grand  Central  Terminal : 


Local 


3,066,495. 


Inter-line,  East 
of  Niagara 
Frontier 


293,180. 


Inter-line,  West 
of  Niagara 
Frontier 


265.371.  3,625,046. 


No.  commutation  passen- 
gers, Grand  Central  Ter- 
minal   


4,122,711. 


3,625,046  X 4.44  x $.0246425  = $ 396,625.85 
4,122,711  X 4.44  x $.00742  = $ 135,821.89 


$ 532,447.74 

Compare  this  with  Mr.  Foulds’  presentation  for 
the  year  ending  June  30,  1899  (without  125th 
Street;  p.  149,  fol.  445),  $438,509.40;  for  the  year 
ending  December  31,  1899  (fols.  458,  560),  $474,- 
499.04). 

We  have  already  pointed  out  the  method  sworn 
to  by  the  defendant  Tax  Commissioners  in  all 
assessments  of  special  franchises  located  in  New 
York  County  made  by  them,  viz.,  they  took  a per- 
centage, in  no  case  exceeding  five,  of  the  gross 
earnings,  where  there  were  net  earnings,  and  di- 
vided it  by  the  tax  rate,  the  quotient  being  their 
valuation  of  the  intangible  element;  tliis,  added 
to  the  valuation  of  the  tangible  i)roperty,  nuule  u]) 
the  assessment. 

Without  any  deduction  for  operating  ex])enses, 
concededly  large,  and  without  any  deduction  of 


170 


an  income  of  say  six  per  cent,  upon  the  tangible 
property  in  the  franchise  or  the  tangible  property 
used  in  connection  with  the  alleged  special  frau 
chise,  the  right  to  deduct  which  in  getting  at  an 
as^sessinent  under  the  net  earnings  theory  has 
been  repeatedly  recognized  by  the  courts,  but 
merely  to  get  at  the  utmost  assessment  which  the 
Board  would  have  been  justified  in  making  on 
their  own  theory,  and  taking  the  undisi)uted  tes- 
timony as  to  the  gross  income  apportioned  on 
the  mileage  basis  of  the  alleged  special  franchise, 
these  statements  would  be  made  up  as  follows : 


Gross  income  (Foulds)  New  York 

Central  operation $474,499.04 

Paid  by  New  Haven  Company  for 
trackage  170,120.67 


Total  gross  income $644,619.71 


5%  of  the  foregoing  is  $32,230.9855 
which  divided  by  the  tax  rate  for 
1900,  viz.,  .0224771  produces  as  the 


value  of  the  intangible $1,433,948.00 

To  which  add  the  value  of  the 
tangible  as  testified  to  by  Mr.  Hoyt 
and  as  found  by  the  Court  below.  . 4,899,300.00 


Total  assessment  as  full  value $6,333,248.00 

which  when  equalized  by  taking 
the  testified  ratio  of  67%  produces 
an  equalized  assessment  of $4,243,276.16 


If  we  follow  the  computations  of  the  defend- 
ants’ expert,  Mr.  Odell,  api)ortioning  the  alleged 
special  franchise  its  share  on  the  mileage  basis, 
we  obtain : 

Gross  income.  New  York  Central 
operation 


$532,447.74 


170,120.()7 


Paid  by  New  Haven  Company  for 
trackage  rights 


Total  gross  income $702,568.41 

5%  of  the  last  mentioned  amount 

is  $35,128.4205 

dividing  this  amount  by  the  tax 
rate  of  .0224771  we  get  as  the 

value  of  the  intangible $1,567,303.00 

to  which  add  the  value  of  the  tan- 
gible as  found  by  the  Court  below  4,899,300.00 


which  makes  the  total  assessment 

at  full  value $6,466,603.00 

equalizing  it  by  taking  67%  there- 
of as  found  by  the  State  Board  of 
Kqualization  for  the  year  in  ques- 
tion we  get  an  equalized  assess- 
ment of $4,332,624.01 

which  we  respectfully  submit  is  the  utmost  pos- 
sible assessment  which  the  facts  will  warrant. 

We  have,  however,  the  testimony  of  the  de- 
fendant Tax  Commissioners  that  where  the  ex- 
pense of  oi)erating  a given  s])ecial  franchise  was 
ecjual  to,  or  in  excess  of,  tiie  gross  earnings,  when 
the  franchise  was  fairly  and  reasonably  exercised, 
the  Tax  Commissioners  put  a merely  nominal 
valuation  upon  the  intangible  element,  and  con- 
fined their  assessment  to  the  tangible  proj)erty, 
and  that  this  course  had  been  actually  followed 
by  the  Board  in  assessing  certain  si)(!cial  fran- 
chises for  the  purjioses  of  taxation  (]».  141,  fol. 
422). 

In  the  present  case  it  was  eheerfnily  concedecl 
by  the  defendants’  witness,  Mr.  Odell,  that  tin; 


tracks  in  question  are  put  to  the  best  railroad 
purposes  to  which  the  same  could  be,  and  that  the 
tracks  were  used  to  the  utmost  possible  extent 
(p.  488,  fob  1463;  p.  487,  fob  1459). 

We  have  also  the  testimony  of  Mr.  Stearns,  one 
of  the  defendants,  that  upon  the  assumption  that 
the  figures  adduced  by  the  relator,  showing  gross 
earnings  and  operating  expenses  were  correct,  the 
intangible  element  in  the  alleged  special  franchise 
has  no  more  than  a nominal  value  (p.  255,  fob 
765). 

The  relator  produced  a witness,  Mr.  11.  L.  In- 
gersoll,  employed  in  the  Operating  Department 
of  the  relator,  and  particularly  engaged  in  mak- 
ing computations  of  this  character,  who  testified 
to  the  expenses  of  operating  this  stretch  of  track 
in  Park  Avenue  between  45th  Street  and  133rd 
Street  for  the  calendar  year  1899  (p.  156,  fob  468) 
as  follows : 

“Operating  expenses  of  that  portion  of  the 
X.  Y.  & Harlem  Railroad  in  Park  Avenue  between 
45th  and  133rd  Streets.  Calendar  year  1899 ; 


Maintenance  of  Way $194,131.99 

Station  Employees 28,921.29 

II.  L.  & S.  at  Sta 15,855.00 

Towermen  38,559.95 

Passenger  Trains 91,468.63 

Shop  Trains 52,441.82 

Accidents  218,946.72 

Executive  Expenses 64,032,51 


Total $704,357.91” 


With  gross  earnings  of  $644,619.68  a defiOt  of 
$59,738.23  results. 

The'  learned  Referee  api)arently  thought  that 
this  method  of  ])r('senting  tlu*  expenses  of  oi^er- 


173 


ating  the  alleged  special  franchise  was  open  to 
criticism  (p.  737,  fol.  2211).  His  view  a.pi)areutly 
is  that  the  relator  ought  not  to  have  charged  the 
actual  expenses  of  maintaining  this  particular 
stretch  of  track,  but  should,  perhaps,  have  merely 
assigned  the  general  proportion  of  maintenance 
of  way,  signal,  station,  etc.,  exiienses,  which  this 
stretch  of  track  bears  to  the  whole  system  of  rail- 
roads operated  by  the  relator.  AVe  fail  to  appre- 
ciate the  justice  of  this  criticism.  Our  statement 
of  earnings  of  this  franchise  is  not  based  upon  the 
average  earnings  per  mile  of  all  the  tracks  oper- 
ated by  the  relator,  but  the  actual  earnings  com- 
puted on  the  mileage  basis  of  the  actual  passen- 
ger, mail  and  express  that  pass  over  this  stretch 
of  track.  It  is  claimed  that  this  alleged  special 
franchise  is  a great  business  getter,  and  it  seemed 
to  the  relator,  therefore,  appropriate  to  show 
what  the  business  really  gotten  amounted  to. 
Following  this  theory  of  presenting  the  gross 
earnings  which  the  defendants  say  is  the  only 
right  one,  win'  is  it  not  logically  consistent  to 
prove  as  nearly  as  may  be  the  actual  expenses  of 
maintaining,  and  oi)erating  trains  over,  this 
stretch  of  track?  It  was  possible  to  get  with  a]»- 
proximate  accuracy  the  expense  of  maintenane(> 
of  way,  station  employees,  heat,  light  and  service 
at  stations,  towermen,  and  accidents.  It  does  not 
seem  to  be  questioned  that  this  stretch  of  ti'aek 
is  much  more  ex])ensive  to  maintain,  consisting 
as  it  does  of  tunnels,  and  stone  and  st<*el  viaducts 
subject  to  enormous  daily  use,  than  would  be  a 
similar  4.44  miles  of  foui'-track  railroad  lying  out 
in  the  oi)en  country,  and  suppoi-ting  much  less 
dense  traffic. 

Of  course,  it  was  not  ]»ossible  to  give  with  ex- 
actness the  cost  of  «)i)erating  passenger  trains 
and  sho})  trains  over  this  stretch  of  ti'ack,  but  it 


174 


is  manifest  that  the  expense  of  operating  a train 
between  the  Grand  Central  Terminal,  for  instance, 
and  Poughkeepsie  must  be  substantially  the  same 
amount  for  each  mile  of  the  journey,  and  the  ex- 
pense, therefore,  of  pulling  such  a train  over  this 
stretch  of  track  4.44  miles  in  length  would  be  the 
])roportion  which  4.44  miles  bears  to  the  distance 
in  miles  between  the  Grand  Central  Terminal  and 
Poughkee])sie,  and  so  with  other  train  movements, 
mile  for  mile  the  cost  of  moving  a passenger  train 
over  any  part  of  the  system  of  railroads  operated 
l)y  the  relator  would  approximate  the  same. 

It  is  ol)vious  that  there  is  no  system  of  account- 
ing by  which  the  cost  of  train  operation  over  this 
particular  stretch  of  track  could  be  definitely  as- 
certained. A com])utation  based  upon  averages 
is  inevitable.  We  submit  that  if  there  is  a dif- 
ference, the  expense  of  operating  here  would  be 
larger  on  account  of  the  large  number  of  train- 
men who  are  necessary  in  the  suburban  and  com- 
mutation service,  and  in  the  frequent  stoics  and 
waits  which  trains  have  to  make  in  getting  in  and 
out  of  a very  congested  terminal. 

Abundant  oppoidunity  was  given  the  defend- 
ants, and  the  intervening  City  of  Xew  York,  to 
examine  the  data  on  which  Mr.  Ingersoll’s  com- 
])utations  were  based,  and  to  cheek  his  calculations 
before  he  was  cross-examined.  He  was  some- 
what thoroughly  cross-examined,  but  his  figures 
were  in  no  way  inqmgned.  It  is  also  significant 
that  the  defendants  having  been  given  access  to 
the  Relator’s  records,  and  having  all  the  means 
of  ])resenting  a statement  of  the  cost  of  operating 
this  stretch  of  track,  which  the  Relator  had,  of- 
fered no  evidence  on  tlie  subject. 

Even  if  we  attempt  to  estimate  the  cost  of  oper- 
ating this  stretch  of  track,  using  only  the  general 


average  results  on  the  Company’s  whole  business, 
we  should  find  that  the  expenses  of  operation 
amount  to  a very  substantial  sum.  It  was  shown 
that  upon  the  entire  operations  of  the  Company 
for  the  year  ending  June  30,  1899,  the  operating 
ratio,  that  is  the  cost  to  secure  each  dollar  of 
gross  earnings,  was  62.69%  (p.  288,  fol.  862). 
The  application  of  this  ratio  to  the  gross  earn- 
ings of  $644,619.71 

would  show  that  the  cost  of  operation  was  not  less 
than  $464,292.10.  Such  a basis  of  computation, 
we  submit,  is  unjust  to  the  relator  as  it  puts  this 
short  and  extremely  expensive  stretch  of  track 
substantially  on  the  same  basis  as  an  equal  stretch 
of  track  away  off  in  the  country  where  there 
are  no  special  structures,  such  as  tunnels  and  via- 
ducts to  maintain,  and  no  such  heavy  outlay  for 
signals  and  stations,  and  the  like  expenses,  as 
are  necessarily  incurred  in  operating  this  stretch 
of  track.  Even  with  the  ap])lication  of  this  theory 
of  comimting  the  expenses  of  operating  this  track 
we  would  have  a surplus  of  only  $180,327.61.  On 
any  theory  of  net  earnings  such  as  that  set  forth 
in  the  Jamaica  Water  Supplij  Company’s  case 
the  relator  would  be  entitled  to  deduct  a fair  re- 
turn ujjon  the  tangible  property  in  the  alleged 
special  franchise;  this  as  found  ))y  the  Court  is 
$4,899,300.  Six  jjer  cent,  on  which  is  $293,958, 
leaving  a deficit  of  $113,631,  so  that  ui)on  either 
the  theory  of  the  defendant  Tax  Commissioners, 
or  that  of  the  net  earnings  theory  set  forth  in  the 
Jamaica  Water  Supply  Company’s  case,  the  in- 
tangible  element  in  this  special  franchise  would 
have  no  value. 

If  we  take  Mr.  Odell’s  figures  and  get  at  tin* 
mileage  ])roportion,  a flefieit  would  result,  and 
this  without  crediting  the  relatoi-  with  a 6 ])er 


176 


cent,  return  on  any  proportion,  no  matter  how 
small,  of  the  enormous  investment  of  capital 
which  has  been  made  in  the  Grand  Central  Ter- 
minal and  the  Mott  Haven  yard,  both  of  which  are 
absolutely  essential  to  achieve  any  earnings  what- 
ever upon  the  alleged  special  franchise.  The 
omission  to  credit  the  relator  with  any  return 
whatever  upon  this  property,  which  represents 
many  millions  of  dollars,  and  on  which  the  taxes 
alone  represent  enormous  sums,  certainly  ob- 
viates the  criticism  of  the  referee  at  page  738, 
folio  2213. 

It  should  be  borne  in  mind  that  for  many  years 
the  relator  has  been  taxed  to  the  very  limit  on 
this  property  constituting  the  alleged  special  fran- 
chise. The  Court  of  Appeals  in  People  ex  rel  The 
Neiv  York  d Harlem  Railroad  Company  v.  Com- 
missioners  of  Taxes  of  New  York  (101  N.  Y., 
322),  reversing  the  General  Term  (23  Hun,  687), 
held  that  the  Company  must  pay  taxes  upon  all 
of  the  tunnel  and  viaduct  structures,  though  the 
bulk  of  them  were  erected  solely  to  facilitate  the 
use  of  Park  Avenue  for  street  jjurposes. 

Upon  the  argument  of  this  case  before  the 
Referee  and  at  Special  Term,  the  defendants 
presented  a computation  of  the  value  of  the  in- 
tangible element  in  this  alleged  special  franchise, 
based  upon  computations  of  Mr.  Odell,  and  in 
part  upon  certain  assumptions  and  calculations 
made  upon  figures  presented  in  the  Annual  Re- 
port of  Relator  to  its  stockholders.  The  Referee 
and  the  Trial  Court  took  no  stCK’k  in  tliis  i)resen- 
lation.  The  Referee  says  at  folio  2217:  “It  is 
based  on  what  might  be  called  a revenue  car  mile 
basis.  As  I have  said  before,  however,  it  reciuires 
us  to  assume  facts  and  eliminate  figures  which 
]n’event  its  result  having  the  element  of  accuracy 
which  should  be  required  in  a definite  finding  of 


money  value  to  the  special  franchise.”  And  the 
Findings  of  Fact  which  were  presented  by  the 
Respondents,  based  upon  this  computation  or 
presentment  (folios  2076-2088)  were  refused  by 
the  Referee,  and  the  Court.  The  effort  in  any 
event  shows  the  desperate  straits  to  which  the 
defendants  felt  themselves  reduced  in  order  to 
produce  some  figures  which  could  be  asserted  as 
justifying  the  wholly  conjectural  assumption  of 
the  defendant  Tax  Commissioners  that  the  in- 
tangible element  in  this  franchise  was  worth  $5,- 
192,000.  The  assertion  as  set  forth  in  the  148th 
Proposed  Finding  of  Fact  of  the  Intervenor  (fol- 
2088)  which  was  refused,  that  the  value  of  this 
alleged  special  franchise  is  the  sum  of  $73,834,916 
for  4.44  miles  of  track  as  against  a total  value  of 
the  entire  railroad  property,  exclusive  of  equip- 
ment, of  $135,339,263.15,  including  a total  of 
2,394.88  miles  of  railroad  sufficiently  indicates  the 
absurdity  of  the  result. 

In  the  1908  case  argued  herewith,  upon  gross 
earnings,  according  to  Mr.  Odell,  of  $9,511,725 
through  the  Park  Avenue  gateway,  or  only  $161,- 
024  less  than  the  like  earnings  here,  using  tlie 
same  method,  defendants  work  out  an  intangible 
value  of  $33,506,133,  or  $35,429,573  less  value 
than  for  1900.  In  other  words,  while  earning 
the  same  gross  income  substantially,  the  alleged 
special  franchise  is  worth  twice  as  much  in  1900 
as  in  1908! 

The  fact  that  the  Intervenor,  The  (fity  of  New 
York,  is  also  an  ai)j)ellant  here,  and  might  urge 
this  presentation  upon  tlie  Court,  with  a view  to 
getting  a ruling  as  to  tlu*  proper  method  of  get- 
ting at  the  value  of  the  intangible  elenunt,  must 
be  our  excuse  for  entering  more  at  large  into  an 
analysis  thereof. 


178 


This  presentation  consists  of  two  parts  : 

The  first  is  Mr.  Odelhs  calculation,  based  upon 
the  annual  report  to  the  stockholders  and  upon 
the  evidence  in  the  case  as  well,  of  the  passenger, 
mail  and  express  earnings  made  with  reference 
to  the  alleged  special  franchise,  not  wholly  de- 
rived from  it,  but  earnings  in  the  securing  of 
which  the  alleged  special  franchise  was  an  in- 
strumentality. 

We  have  already  discussed  to  some  extent  this 
presentation  of  gross  earnings  through  the  Park 
Avenue  gateway. 

The  second  part  of  the  presentation  consists  of 
a calculation  of  the  supposed  cost  to  the  relator 
of  earning  the  portion  of  its  passenger,  mail  and 
express  earnings,  which  are  derived  through  the 
Park  Avenue  gateway,  and  then,  having  arrived 
at  the  supposed  net  earnings,  the  presentation 
proceeds  with  the  deduction  of  certain  items  which 
it  is  claimed  should  be  credited  the  relator  before 
any  final  net  earnings  are  arrived  at,  which,  when 
capitalized,  form  the  supposed  value  of  the  in- 
tangible element. 

The  entire  presentation  is  based  upon  certain 
assumptions  which  we  think  it  is  appropriate  to 
discuss  at  the  outset,  and  which  we  think  are 
unwarranted. 

First. — It  is  assumed,  both  in  presenting  the 
alleged  gross  earnings  and  the  cost  of  operation, 
and  deductions  from  the  supposed  net  return, 
that  the  alleged  special  franchise  in  Park  Avenue 
in  a sine  qua  non,  without  which  no  earnings  what- 
ever would  accrue  to  the  New  York  Central  aiul 
Hudson  River  Railroad  Comiiany  from  ])assen- 
ger,  mail  or  ex])ress,  so  far  as  the  same  are  ti'ans- 
ported  in  and  out  of  the  City  of  New  York.  This 
railroad  system  operated  by  the  relator  is  re- 


179 


garded  as  a mere  appanage  of  a stretch  of  track 
4.44  miles  in  length,  connecting  the  relator’s  pas- 
senger terminal  with  its  railroads  in  the  City  of 
New  York  and  beyond. 

This  assumption,  as  we  have  alreadj"  endeav- 
ored to  show,  is  unwarranted  both  in  fact  and  in 
reason.  If  the  railroad  stopped  short  at  the  east 
bank  of  the  Harlem  River  and  had  its  terminal 
there,  whether  or  not  its  passenger,  mail  and  ex- 
press earnings  would  be  the  same  is  wholly  a 
matter  of  conjecture.  There  is  no  evidence  on  the 
subject,  and  so  speculative  a proposition  is  not 
susceptible  of  evidence.  IVhether  or  not  there 
would  be  in  fact  any  material  diminution  in  such 
earnings  is  wholly  a speculative  proposition. 
Whether  or  not  the  earnings  under  such  circum- 
stances would  be  diminished  to  such  a point  as  to 
more  than  equalize  the  very  great  cost  which  the 
relator  is  put  to  for  fixed  charges,  taxes  and  op- 
erating expenses  with  reference  to  the  terminal 
as  it  now  exists,  is  wholly  speculative.  That  the 
alleged  special  franchise  in  Park  Avenue  if  dis- 
severed from  the  railroads  which  connect  witli  it 
at  tlie  south  bank  of  the  Harlem  River,  and  oi)ei‘- 
ated  as  a sei)arate  line,  would  he  unremunerativc 
in  view  of  the  vast  outlay  of  cai)ital,  fixed  charges, 
operating  ex])enses  and  taxes  is  substantially 
conceded  by  Mr.  Odell  (]).  oOo,  fol.  1515).  We  say 
that  to  regard  the  alleged  special  franchise  in 
Park  Avenue  as  the  essential  feature  of  the  entire 
railroad  system  oi)erated  by  the  relator,  all  oilier 
parts  being  subordinated  to  this  short  segment 
of  railroad,  is  as  repugnant  to  the  facts  and  to 
reason  and  to  justice  to  the  relator  as  the  oth(>r 
view  that  the  alleged  special  franchise  must  be 
considered  as  a separate  railroad  beginning  at 
the  Grand  Central  Terminal  and  ending  at  the 
Harlem  River,  would  be  unjust  to  the  defendants. 


180 


Our  view  has  been,  and  we  have  presented  this 
case  and  the  evidence  therein  npon  the  assump- 
tion that  one  part  of  the  railroad  was  as  good  as 
another,  that  one  part  of  the  railroad  was  as 
necessary  to  sustain  corporate  activities  as  eveiy 
other  part  of  the  railroad,  and  that  in  getting  at 
actual  earnings,  and  actual  expenses  of  operation, 
where  the  figures  could  not  be  absolutely  obtained, 
the  mileage  proportion  should  govern. 

The  passenger  who  goes  from  Albany  to  New 
York,  or  vice  versa,  over  the  railroad  of  the  rela- 
tor, does  so  quite  as  much  because  the  railroad 
gets  into  the  heart  of  Albany  as  because  it 
reaches  “the  heart  of  New  York.”  The  transpor- 
tation facilities  at  Albany  are  just  as  essential  as 
the  transportation  facilities  at  New  York  City. 
One  cannot  be  justly  subordinated  to  the  other. 

The  presentation  of  the  defendants  assumes 
that  the  vast  network  of  railroads  covering  the 
State,  and  operated  by  the  relator  in  connection 
with  lines  traversing  other  States,  is  merely 
physical  property  used  in  connection  with  this 
alleged  special  franchise. 

The  presentation  involves  the  assumption  that 
the  relator  has  no  other  franchises,  general  or 
special,  over  its  entire  system,  but  merely  this 
alleged  special  franchise  in  Park  Avenue,  and 
that  on  all  its  other  property  outside  of  this  al- 
leged special  franchise  it  is  to  be  entitled  only  to 
a sup])osed  fair  return,  irrespective  of  its  right 
to  derive  a profit  from  the  whole  of  its  system 
which  capitalized  might  be  regarded  as  the  value 
of  its  general  franchise  and  of  its  aggregate 
special  franchises  outside  of  Park  Avenue. 

We  submit  that  merely  to  state  these  considera- 
tions is  to  show  that  this  first,  and  fundamental, 
assumption  on  the  ])art  of  the  defendants  is  wholly 


ISl 


without  warrant.  As  already  pointed  out,  if  de- 
fendants’ argument  be  carried  to  its  logical  result, 
it  would  mean  that  the  value  of  the  relator’s  prop- 
erty would  be  multiplied  by  as  many  times  as  it 
had  any  alleged  special  franchises  on  its  entire 
system  subject  to  assessments  by  the  State  Board. 

Second. — The  defendants  through  the  testimony 
of  Mr.  Odell,  having  worked  out  a proportion  of 
the  earnings  from  passenger,  mail  and  express, 
due  to  the  Park  Avenue  gateway,  amounting  for 
the  year  1899  to  $9,672,749,  and  this  by  jumbling 
together  the  earnings  from  passenger,  mail  and 
express  in  a manner  which  we  ,have  already 
argued  is  wholly  unjustifiable,  inasmuch  as  these 
items  are  quite  susceptible  of  separate  computa- 
tion, and  are  ordinarily  so  computed  in  getting  at 
the  earnings  of  a railroad,  are  confronted  with 
the  necessity  of  showing  what  it  costs  the  rail- 
road company  to  earn  the  $9,672,749.  To  prove 
this  precisely  is,  of  course,  impossible.  Only  ap- 
proximate comi)utation,  or  estimate,  can  be  pre- 
sented. The  value  of  such  estimate  must  neces- 
sarily depend  upon  the  basis  of  computation. 

We  think  there  is  considerable  significance  in 
the  fact  that  Mr.  Odell  was  not  produced  as  a wit- 
ness on  the  jiropositioji  of  what  the  fair  cost  to 
the  relator  was  of  earning  the  $9,672,749  gross  to 
which  he  testified.  He  was  not  asked  as  an  exqun  t 
to  designate  any  basis  of  com))utation  of  such 
cost  from  the  company’s  annual  re})ort.  Tin* 
basis  used  is  not  fortified  by  his  testimony  or  l»y 
that  of  any  expert  witness.  The  only  jierniis- 
sible  inference  is  that  no  resi)ectable  testimony 
could  be  secured  to  ju.stify  the  basis  of  computa- 
tion ado)»ted  by  defendants,  and  the  assum])tions 
on  which  it  rests;  that  no  railroad  man  of  (‘xperi- 
ence  and  with  any  regard  for  his  rei)utation  would 


182 


stand  for  any  such  presentation  as  defendants 
make. 

In  the  present  case  the  entire  earnings  of  the 
railroad  from  operation  are  shown  in  the  annual 
report,  comprising  earnings  from  freight  opera- 
tion, transportation  of  passengers,  mail,  express, 
rentals  and  miscellaneous.  No  freight  is  trans- 
IJorted  over  the  alleged  special  franchise,  so  that 
the  gross  earnings  as  computed  hy  Mr.  Odell  may 
not  and  do  not  include  any  freight  earnings. 
Therefore,  the  cost  of  making  such  earnings  can- 
not in  any  way  be  predicated  upon  the  cost  of 
freight  operation.  There  is  no  separation  in  the 
expense  of  making  freight  earnings,  and  making 
the  passenger,  mail  and  express  earnings.  This  is 
manifestly  impossible,  except  by  estimation,  be- 
cause the  same  instrumentalities  of  track,  signals, 
terminals,  round  houses,  shops,  and  to  some  extent 
motive  power,  are  used  indiscriminately  in  both 
freight  and  passenger  operation. 

The  defendants,  in  getting  at  an  estimate  of  the 
supposed  cost  to  the  relator  of  making  the  sii])- 
posed  earnings  through  the  Park  Avenue  gate- 
way, have  adopted  the  basis  of  car  mileage,  with- 
out discriminating  between  passenger  and  freight 
car  mileage.  The  defendants  postulate  that  the 
relator  is  entitled  to  no  credit  whatever  for  the 
cost  of  moving  empty  freight  cars,  and  work  cars, 
although  these  operations  are  absolutely  neces- 
sary to  the  transportation  of  passenger  and 
freight  cars  which  do  contain  passengers  or 
freight,  and  are,  therefore,  designated  as  revenue 
earning.  We  can  see  no  reason  or  justice  in 
making  this  exclusion. 

The  defendants  then  take  the  aggregate  car 
mileage,  that  is  the  aggregate  number  of  miles 
that  one  loaded  freight  car  would  make,  and  the 
aggregate  nnmher  of  miles  which  one  loaded  jias- 


183 


senger  car  would  make  in  the  year  and  use  the 
total  as  a means  of  getting  at  the  ratio  of  total 
expenses  of  operation,  Avhich  the  relator  incurred 
in  order  to  earn  the  $9,672,749  gross.  This  com- 
putation necessarily  assumes  that  it  costs  exactly 
the  same  amount  of  mone}’  to  move  one  loaded 
freight  car  a mile  as  it  does  to  move  one  loaded 
passenger  car  the  same  distance,  and  that  the  cost 
is  the  same  for  eveiw  part  of  the  system..  It  is 
quite  needless  to  say  that  there  is  no  evidence  in 
the  record  which  supports  any  such  assumption. 
It  is  absolutely  contrary  to  common  knowledge, 
and  to  common  sense.  A freight  car  is  moved  in 
a train  of  from  30  to  90  cars.  It  is  moved  at  a 
comparatively  slow  speed,  and  with  a crew  con- 
sisting of  only  4 or  5 men.  A passenger  car  is 
one  in  a train  not  ordinarily  exceeding  12  or  15 
cars,  and  is  moved  at  a speed  2 to  6 times  greater 
than  that  of  a freight  train,  with  correspondingly 
heavier  wear  upon  the  track.  In  the  cost  of  mov- 
ing loaded  freight  cars  and  passenger  cars  the 
expense  of  up-keep  is  necessarily  included.  A 
passenger  car  costs  many  times  more  than  a 
freight  car.  It  contains  more  expensive  material, 
and  apparatus,  it  is  finished  in  a much  more  ex- 
I)ensive  manner  as  regards  interior  furnishings, 
painting,  varnishing,  etc.,  and  all  of  these  items 
of  up-kee])  are  necessarily  verj'  much  heavier  than 
in  the  case  of  a freight  car. 

The  station  expenses  involved  in  handling  j)as- 
sengers  in  and  out  of  cars  is  heavy  compared  with 
the  loading  and  unloading  of  freight  cars,  most 
of  which  is  done  by  tbe  shii)pers  and  consignee. 

We  submit  that  this  liasic  assumption  is  wholly 
unwarranted,  and  its  rejection  entirely  overtiums 
the  calculation  of  the  defendants.  In  order  to  gr-t 
at  a working  ratio  to  find  the  sup]»osed  expemses 


184 


for  earning  tlie  $9,672,749,  defendants  must  make 
another  step  and  erect  a still  further  hypothesis. 
There  is  nothing  to  show  in  the  records,  or  annual 
report,  the  proportion  of  passenger  car  mileage 
in  and  out  of  the  Grand  Central  Terminal.  De- 
fendants, therefore,  seek  to  derive  one  by  assum- 
ing that  the  average  number  of  passengers  in  a 
car  running  in  or  out  of  the  Grand  Central  Ter- 
minal is  the  same  as  it  is  over  all  other  i)arts  of 
the  system;  in  other  words,  that  traffic  is  no 
denser  over  the  alleged  special  francb’se  in  Park 
Avenue  than  it  is  on  the  E.  W.  & 0.,  the  Pennsyl- 
vania Division,  or  the  numerous  small  subsidiary 
lines  forming  a part  of  the  general  system  in  con- 
trihuting  to  the  average  number  of  i)assengers 
carried  in  a car.  This  assumption  is  not  only 
unwarranted  by  anything  in  the  evidence,  but  is 
contrary  to  common  observation  and  sense.  The 
assumption  involves  a statement  that  traveling  in 
and  out  of  the  Grand  Central  Station  there  are 
only  10.48  (fol.  2078)  i)assengers  per  passenger 
car  mile.  xCny  one  with  the  slightest  knowledge 
of  the  actual  traffic  realizes  the  absurdity  of  this 
assumption. 

Using  the  foregoing  successive  assumptions, 
however,  the  defendants  present  the  conclusion 
that  the  decimal,  .107464,  represents  the  propor- 
tion of  the  car  miles  contributing  to  the  return 
on  the  investment  in  the  Grand  Central  System 
apportioned  to  the  Grand  Central  revenue.  In 
other  words,  it  ‘is  assumed  that  to  earn  the  $9,- 
672,749  out  of  a total  of  $46,184,657.51,  the  relator 
was  put  to  an  expense  of  only  10.7464%  of  tlie 
total  expense  of  operating  its  system. 

Third.- — These  ]iresentations,  therefore,  assume 
a further  pro]iosition,  viz.,  that  the  capital  in- 
vested in  each  mile  of  track  is  the  same  over  all 
the  system ; that  the  cost  of  maintenance  is  the 


1S5 


same  for  the  4.44  miles  as  for  auy  similar  stretch 
of  track  lying  in  the  open  country,  and  that  the 
terminal  expenses  in  handling  passengers  is  pre- 
cisely the  same  at  the  Grand  Central  Terminal 
as  it  would  be  at  any  little  obscure  station  on  the 
K.  W.  & 0. 

By  using  this  series  of  assumptions,  wholly  un- 
warranted by  any  evidence  in  the  record,  wholly 
contrary  to  fact,  to  common  observation  and  to 
common  sense,  the  defendants  arrive  at  the  con- 
clusion that  to  earn  the  $9,672,749  required  an 
operating  expenditure  of  $3,130,317,  a ratio  of 
about  32.36%,  whereas  that  shown  in  the  Com- 
pany’s annual  report  for  the  entire  system  for  the 
j’ear  is  62.69%  (fol.  863).  That  is  to  say,  upon  the 
most  expensive  portion  of  its  entire  railroad 
system,  involving  the  greatest  outlay  of  capital 
and  taxes  thereon,  the  largest  expenditure  for 
maintenance  of  way,  for  signalling,  and  station 
expenses,  where  nearly  every  train  coming  into 
the  Grand  Central  Terminal  has  to  be  deadheaded 
out  to  Mott  Haven  yard,  and  back  again;  on  that 
I)articular  portion  of  its  railroad  it  costs  only 
about  one-half  to  oi)erate  what  it  does  to  operate 
generally  over  the  entire  system.  It  would  seem 
as  if  absurdity  could  hardly  go  further. 

When  this  calculation  of  sui)])osed  exjjense  in 
earning  the  $9,672,749  is  compared  with  the  direct 
and  i)ositive  testimony  of  Mr.  Ingersoll,  showing 
exactly  what  it  cost  to  maintain  the  right  of  way 
over  the  4.44  miles  in  question,  wjiat  the  expense* 
of  signals,  including  actual  salaries  paid  to  em- 
ployees was,  what  the  expense  of  heating,  light 
and  power  at  stations  cost,  accidents,  and  other 
actual  figures,  we  realize  how  illusive  the  pre- 
sentation of  the  defemlants  hecemies,  especially 
when  the  figures  given  by  Mr.  Ingersoll  are  abso- 
lutely unchallenged  by  any  evidence  whatever. 


186 


AVe  say  that  the  figures  in  the  annual  rei)ort 
are  not  susceptible  of  any  presentation,  indicating 
a substantial  value  in  the  intangible  element  of 
this  alleged  special  franchise  without  assumptions 
which  are  grossly  unjust  to  the  relator,  and  con- 
trary to  fact.  The  only  way  in  which  the  defend- 
ants could  work  out  any  excess  whatever  of  earn- 
ings over  oi)erating  expenses  is  by  the  adoption 
of  the  absurd  .107464;  based,  as  shown,  upon 
wdiolly  erroneous  or  groundless  hypotheses. 

AVe  appreciate  the  difficulty  of  making  any  pre- 
sentation of  the  earnings  and  operating  expenses 
in  connection  with  this  alleged  special  franchise, 
particularly  as  there  is  no  definite  basis  for  sep- 
arating the  cost  of  making  the  freight,  as  distinct 
from  the  passenger,  mail  and  express,  earnings. 
AATthout  prejudice,  however,  to  what  we  have 
heretofore  said,  and  without  yielding  our  position 
in  any  respect,  whatever,  we  have  endeavored  to 
work  out  from  Mr.  Odell’s  figures,  and  from  the 
statements  in  the  annual  report,  a presentation 
which,  as  nearly  as  possible,  follows  the  lines  of 
that  of  the  defendants.  The  statement  works  out 
as  follows : 

Gross  earnings  for  the  j’ear  end- 
ing June  30,  1899,  from  passen- 
gers, mail  and  express  business 
on  the  entire  system  as  derived 
from  the  company’s  report,  and 
as  stated  by  Mr.  Odell,  is  the 

snni  of $16,677,136.00 

The  ratio  between  income  and  o})- 
erating  ex])enses  as  shown  by 
the  report  is  62.69%. 

62.69%  of  the  sum  last  stated 
would  be 


10,454,897.00 


187 


Leaving  net  earnings  on  passen- 


ger, mail  and  express,  of $6, 222, 239.00 

Mr,  Odell’s  computation  of  gross 
earnings  in  connection  vith  the 
alleged  special  franchise  shows  9,672,749.00 
Of  which  62.69%  would  be 6,063,846.35 


Leaving  net  over  operating  cost  of 
In  this  assumption  we  are  gener- 
ous ,to  defendants  and  unjust 
to  relator.  From  the  general 
situation  at  this  terminal  it  is 
manifest  that  the  average  per- 
centage of  cost  of  operation  to 
gross  earnings  made  through 
the  Park  Avenue  gateway  is 
greater  than  on  the  system  gen- 
erally. 

To  this  add  total  trackage  rental 
paid  by  the  New  Haven  Com- 
pany from  Woodlawn  to  G.  C. 
T.  (p.  153,  fol.  457) 


$3,608,902.65 


476,261.37 


Total  earnings  charged  against  re- 
lator   .$4,085,164.02 

We  now  come  to  a statement  of  the  deductions 
which  under  the  theory  of  the  defendants  should 
be  made  from  this  gross  sum  in  order  to  arrive  at 
the  strictly  net  return  from  the  alleged  special 
franchise  which  capitalized  fonns  the  value  of  tin* 
intangible  element. 

The  total  value  of  tlie  plant  of  The 
New  York  Central  and  Hudson 
Iiiver  Railroad  Company,  cost 
of  road  and  ecjuipment,  as  found 
on  page  H)  of  the  annual  rei)ort 
and  as  used  by  the  defendants,  is $165,679,75.3.7 1 


188 


From  this  should  he  deducted  the 
amount  of  capital  invested  in 
tangible  property  in  alleged 
special  franchise,  and  in  real 
estate  in  the  Grand  Central  Ter- 
minal, and  at  Mott  Haven  yard, 
exclusive  of  the  real  estate  which 
earns  a rental  from  ontsido  par- 
ties, and  exclusive  of  that  por- 
tion of  the  Grand  Central  Ter- 
minal property,  viz.:  33%,  on 
which  the  New  Haven  Company 
pays  a rental  as  shown  as  fol- 
lows : 

The  total  assessed  value  of  the 
Grand  Central  Terminal  prop- 
erty was  (p.  537,  fol.  1610) .... 
which  according  to  stipulation  is 
67%  of  full  value,  which  would 

be 

Portions  of  this  property  not 
wholly  used  for  railroad  pur- 
poses were  let  to  tenants  for  an 
aggregate  rental  of  $20,500. 
Capitalized  at  6%  the  latter  figure 
represents  


The  remainder  of 

re]n’esents  capital  devoted  to 
wholly  railroad  purposes. 

The  New  Haven  Company  paid 
interest  on  33%  of  this  amount 
under  the  terms  of  the  Tripar- 
tite lease  in  evidence. 

H('ducting  33%  of  this  capital  or 


$5,439,000.00 

8.117.910.00 

341,667.00 

$7,776,243.00 

2.566.160.00 


The  remainder 


$5,210,083.00 


189 


represents  capital  employed  ex- 
clusively by  relator  at  the 
Grand  Central  Tenninal. 

The  assessed  value  of  the  Mott 
Haven  yard  (for  use  of  which 
the  New  Haven  Company  paid 
nothing)  was  $1,910,458  (p.  536, 
fol.  1608),  being  67%  of  full 
value,  or 2,851,429.00 


The  total,  or $8,061,512.00 

represented  capital  invested  in 
real  property  outside  the  al- 
leged special  franchise  and  nec- 
essary to  the  operation  thereof. 

To  this  add  the  value  of  the  tan- 
gible in  the  alleged  special  fran- 
chise as  found  by  the  Court.  . . . 4,899,.300.00 


Grand  total $12,960,812.00 

Leaving  a balance  of  capital  in- 
vested outside  of  the  terminal 

of $152,718,941.71 

The  next  .step  in  the  prol)lem  is  to  ascertain 
how  much  of  the  foregoing  capital  is  assignable 
to  the  use  thereof  for  freight  earnings,  and  the 
use  thereof  for  passenger,  mail  and  exi)ress 
earnings. 

Turning  again  to  the  annual  report,  we  find  that 


out  of  the  entire  earnings $46,184,657.81 

the  total  pas.senger,  mail  and 
express  earnings  as  shown  by 

Mr.  Odell  are 16,677,136.00 

or  36.1  %. 

Taking  ,36.1%  of  $152,718,941.71 
we  have 55,131,538.96 


190 


as  the  proportion  of  capital 
outside  of  the  Grand  Central 
Terminal  and  outside  of  the 
alleged  special  franchise  re- 
quired to  achieve  the  passen- 
ger, mail  and  express  earn- 
ings on  the  whole  system. 

It  now  remains  to  determine  what  proportion 
of  the  last  named  capital  is  assignable  to  that 
part  of  the  passenger,  mail  and  express  earnings 
which  come  through  the  Park  Avenue  gateway. 
We  have  shown  above  that  the  net  earnings  from 
passenger,  mail  and  express  on  the  whole  system 


was $6,222,239.02 

and  the  net  earnings  from  the 
same  source  through  the  Park 
Avenue  gateway  was 3,608,902.65 


being  a proportion  of  58%  of  the  net  earnings 
over  expense  of  operation  on  passenger,  mail  and 
express  business  on  the  entire  system.  It  seems, 
therefore,  that  58%  of  $55,131,538.96  would  rep- 
resent that  proportion  of  the  entire  capital  outside 
of  the  terminal  used  in  producing  that  proportion 
of  the  net  earnings  from  passenger,  mail  and  en- 
press  business  which  goes  through  the  Park  Ave- 
nue gateway. 

This  amounts  to $31,576,292.60 

Upon  this  capital  the  presentation 
of  the  defendants  concedes  that 
the  relator  is  entitled  to  a credit 
of  6%  as  a fair  return  on  the  in- 
vestment, or 1,894,577.56 

which  forms  then  the  first  deduction. 

Outside  of  the  taxes  paid  upon  real  estate  used 
i]i  the  operation  of  the  alleged  special  franchise 
at  the  Terminal,  the  defendants  find  that  the  total 
fixed  charges  are  the  sum  of  $7,799,230.00  (fol. 


191 


2085).  The  relator  is  entitled  to  credit  for  the 
same  proportion  of  these  charges,  that  is  to  say, 
of  this  amount  first  take  36.1%  as  representing 
the  proportion  of  fixed  charges  assignable  to  pas- 
senger, mail  and  express  earnings  on  the  system 
generally,  or  $2,815,522.03  and  of  this  take  58%  as 
the  proportion  coming  through  the  Park  Avenue 
gateway,  which  amounts  to  $1,633,002.78,  and 
forms  the  second  deduction. 

IVe  have  shown  in  a previous  part  of  this  pre- 
sentation that  the  capital  invested  in  the  Grand 
Central  Terminal,  including  the  tangible  prop- 
erty in  the  alleged  special  franchise,  assignable 
to  relator’s  operation  is  $12,960,812.  On  this 
amount  the  relator  is  entitled  to  a fair  return  of 
6%,  or  $777,648.71. 

It  finally  remains  to  deduct  the  taxes  paid  by 
the  relator  upon  the  real  estate  used  in  connection 


vdth  the  alleged  special  franchise. 

As  shown  by  Mr.  Bronson’s  testi- 
mony (p.  537,  fob  1610)  taxes 
on  the  Grand  Central  Terminal 
property  paid  in  1899  were....  $121,030.34 
Deduct  33  per  cent,  paid  by  the 
New  Haven  Company  under  the 
Tripartite  lease 39,940.01 


Net  paid  by  relator $81,090.3.3 

To  this  add  taxes  paid  on  Mott 
Haven  Yard  (fob  1608)  not 
shared  in  by  New  Haven  Com- 
pany   45,512.12 

Taxes  paid  on  railroad  structures 
in  Park  Avenue  (fob  1613)....  85,960.33 


Total  $212,.562.78 


which  forms  the  fourth  deduction. 


SUMMARIZING. 


DEBITS. 

Net  earnings  from  New  York  Cen- 
tral operation $3,608,902.65 

Paid  by  New  Haven  Company  for 
trackage  rental 476,261.37 


Total $4,085,164.02 

CEEDITS. 

6 per  cent,  on  outside 

capital  $1,894,577.56 

Proportion  of  fixed 

charges 1,633,002.78 

6 per  cent,  on  capital 
in  Grand  Central 
Terminal  proper!}^  777,648.71 

Taxes  on  terminal 

property  212,562.78 


Total  credits.  . $4,517,791.83 

Deducting  the  debits  this  leaves  a deficit  of 
$432,627.81  which  must  be  overcome  before  any 
value  more  than  nominal  can  be  assigned  to  the 
alleged  special  franchise  in  Park  Avenue. 

We  submit,  in  conclusion,  that  on  any  fair  an- 
alysis of  the  figures  submitted  to  the  Referee  the 
same  general  result  will  follow.  This  is  not  say- 
ing that  the  entrance  to  “the  heart  of  New  York 
City”  is  not  valuable  to  the  relator.  It  is  valu- 
able; but  as  in  the  case  of  most  valuable  things 
the  relator  pays  full  price  therefor  in  the  vast 
expense  attendant  on  the  maintenance  and  opera- 
tion of  this  most  expensive  part  of  its  railroad 
and  in  the  enormous  aggregate  of  taxes  which  it 
pays  into  the  treasury  of  the  City  of  New  York 
upon  its  physical  property  used  in  connection  with 
the  operation  of  said  stretch  of  track. 


193 


The  Courts  having  determined  that  a corpora- 
tion or  person  exercising  an  alleged  special  fran- 
chise is  entitled  under  the  net  earnings  theory  to 
a deduction  of  6%  upon  the  value  of  property 
used  in  connection  with  the  alleged  special  fran- 
chise from  any  sum  which  represents  a surplus 
of  gross  earnings  over  expenses  of  operation,  the 
impossibility  of  working  out  upon  any  rational 
basis  a substantial  value  in  the  intangible  element 
in  the  alleged  special  franchise  operated  by  the 
relator  is  seen  from  the  fact  that  the  relator  does 
not  and  cannot  realize  a return  of  6%  upon  its 
total  capital  invested  in  the  business  of  transpor- 
tation. Even  though  a considerable  portion  of 
that  capital  is  represented  by  bonds  bearing  a 
rate  of  interest  considerably  below  6%  it  does 
not  pay  and  is  unable  to  pay  a dividend  of  6% 
upon  the  balance  of  its  capital  invested  in  the 
railroad  in  New  York  State  operated  by  it.  Its 
ability  to  pay  five  or  six  per  cent,  upon  its  stock 
is  due  to  the  well-known  fact  that  as  a large  stock- 
holder in  lines  running  west  of  Buffalo  it  derives 
a dividend  income  which,  in  conjunction  with  the 
very  low  percentage  of  net  earnings  on  the  sys- 
tem in  New  York  State,  enables  it  to  pay  a divi- 
dend upon  its  stock  issue  varying  from  four  to 
six  per  cent. 


194 


THIRD  POINT. 

The  Courts  below  correctly  ruled  that 
Relator  is  entitled  to  have  the  assessment 
equalized  with  the  assessments  of  other 
real  estate  not  special  franchises  in  New 
York  County. 

The  tax  law  in  force  at  the  time  this  assessment 
was  made  required  the  State  Board  to  assess  at 
full  value,  and  the  defendants  testified  that  in 
this  case  they  did  assess  at  full  value  (p.  140,  fol. 
419). 

The  right  of  such  equalization,  after  much  dis- 
cussion and  some  contrariety  of  judicial  opinion, 
has.  been  finally  settled  by  the  Court  of  Appeals 
in  People  ex  rel.  Jamaica  Water  Supply  Company 
V.  State  Board  of  Tax  Commissioners  (196  N.  Y., 
39),  See  discussion  by  Willard  Bartlett,  J., 
pages  60-62.  This  rule  has  been  followed  in  nu- 
merous other  cases  which  have  come  before  the 
courts.  This  course  of  adjusting  franchise  tax 
assessments  has  become  so  universal  that  in  1911 
the  Legislature  amended  the  Tax  Law,  Chapter 
804,  of  the  Laws  of  1911,  by  giving  the  State 
Board  of  Tax  Commissioners  authority,  after  fix- 
ing an  assessment  at  full  value,  to  equalize  it  so 
that  the  same  will  be  upon  a par  with  assessments 
of  other  real  estate  not  special  franchises  in  the 
same  taxing  district. 

In  the  case  at  bar  the  stipulated  fact  (p.  143, 
fol.  429)  is  that  the  percentage  of  realty  assess- 
ment in  the  County  of  New  York  to  full  value, 
other  than  special  franchise  corporations,  as  de- 
termined by  the  State  Board  of  Equalization  for 
the  year  1900,  was  67. 

The  City  of  New  York,  intervening-defendant, 


195 


has  appealed  from  that  part  of  the  final  order 
which  equalizes  the  assessment  in  question,  its 
contention  being,  as  we  understand  it,  that  on  its 
presentation  of  the  net  earnings  of  this  alleged 
special  franchise  the  intangible  element  and  the 
assessed  value  of  the  tangible  property  together 
greatly  exceed  the  assessment  of  $10,192,000.00 
made  by  the  State  Board  of  Tax  Commissioners 
as  the  full  value  of  the  franchise.  As  we  have 
shown,  this  claim  rests  upon  assumption  of  facts 
and  hypotheses  utterly  without  warrant  in  the 
evidence,  and  in  fact,  contrary  to  common  sense 
and  common  observation. 

The  Referee,  and  the  Trial  Court,  specifically 
refused  to  find  the  findings  of  fact  covering  this 
presentation  proposed  by  the  intervening-defend- 
ant (pp.  692-696,  fols.  2075-2088).  There  are  no 
findings  in  the  case  that  the  assessed  value  of  the 
relator’s  property  was  less  than  its  true  value, 
even  when  reduced  so  as  to  equalize  it  with  the 
prevailing  rate  of  assessment.  The  Court  below, 
without  holding  that  the  assessment  under  re- 
view was  either  below  or  above  the  true  value  of 
the  alleged  special  franchise,  in  effect  sustain  d 
it  because  in  its  opinion  no  facts  had  been  ad- 
duced on  the  hearing  on  which  a re-ass(*ssment 
could  be  predicated. 

This  situation  makes  the  recent  riding  of  the 
Court  of  Ai)])eals  in  People  ex  rel.  The  fholsoif 
d:  Manhattan  Pailivaif  Company  v.  State  Itnard 
of  Tax  Commissioners  (decision  handed  down 
October  3,  1911,  rejiorted  96  X.  E.  Rep.,  -1-35)  pre- 
cisely applicable  to  the  case  at  bar.  Chief  Judge 
Cullen  says  in  discussing  an  aiipeal  by  tlie  City 
exactly  similar : 

“In  the  absence  of  such  a fmding  it  must 
be  assumed  that  the  State  Boanl  assessed 


196 


the  relator’s  property  at  its  full  value 
* # * a presumption  which  the  evidence 

in  this  case  fully  supports,  and  the  relator 
was  entitled  to  the  reduction.” 

It  would  seem  that  further  discussion  of  this 
point  is  superfluous. 

The  order  appealed  from  shoald  be  re- 
versed, and  the  assessment  canceled,  or  in 
the  event  that  the  court  finds  that  any 
part  of  the  assessment  is  legal  and  separa- 
ble from  the  illegal  portion,  the  order  ap- 
pealed from  should  be  reversed  and  the 
case  remitted  to  the  special  term  for  fur- 
ther proceedings. 

Eespectfully  submitted, 

IRA  A.  PLACE, 
Attorney  for  Relator- Appellant- 
Respondent. 


Alex.  S.  Lyman, 

Of  Cowisel. 


Argued  by  Alex,  S.  Lyman, 
of  Counsel  for  Kelator- 
Appellant-Hespondeut. 


IN  THE 

QInurt  of  Apppala. 

State  of  New  York. 


The  People  of  the  State  of 
New  York  ex  rel.  The  New 
York  Central  and  Hudson 
River  Railroad  Company, 

Relate  r-Appellan  t- 
Respondent, 

against 

Egburt  E.  "W'oodbury,  Benja- 
min E.  H.VLL  and  Frank  E. 
Perley,  together  constituting 
the  State  Board  of  Tax  Com- 
missioners. 

Defendants-Respondents, 

and 

The  City  of  New  York, 
Intervenor-Respondent- 
A ppelUnit. 

Assessment  of  1908. 


BRIEF  IN  BEHALF  OF  RELATOR- 
APPELLANT-RESPONDENT. 

Statement. 

These  are  cross  appeals  by  the  relator,  and  by 
the  City  of  New  York,  intervenor,  from  an  orfl(*r 
of  the  Appellate  Division  '^Fhird  Department  en- 
tered in  the  office  of  the  clerk  of  Albany  County 


0 


on  the  26tli  day  of  March,  1912,  unanimously  af- 
firming (fol.  2248a)  without  opinion  (fol.  2248h), 
a final  order  (p.  721,  fol.  2161)  entered  in  the 
office  of  the  Clerk  of  Albany  County  on  the  sixth 
day  of  March,  1911,  on  direction  of  the  Hon. 
Alden  Chester,  Justice,  modifying,  and  as  modi- 
fied, affirming  the  assessment  made  in  the  year 
1908  by  the  defendants,  constituting  the  State 
Board  of  Tax  Commissioners,  upon  property  of 
the  relator  as  a special  franchise  tax  assessment. 
The  original  assessment  included  not  only  the 
alleged  special  franchise  in  Park  Avenue,  but 
also  the  alleged  franchise  to  occupy  the  subsur- 
face of  certain  cross  streets  from  45th  to  49th 
Street  east  and  west  of  Park  Avenue,  and  also 
included  the  southerly  half  of  the  railroad  bridge 
over  the  Harlem  River,  amounting  in  all  to  $12,- 
299,400.  The  Referee,  and  the  Courts  below 
have  held  that  the  inclusion  of  the  southerly  half 
of  the  Harlem  bridge  was  error,  and  the  sum  of 
$312,461,  being  the  value  merely  of  the  ]fiiysical 
structures,  was  deducted  and  the  balance  of  $11,- 
916,939  was  equalized  with  the  assessment  of  real 
property  other  than  special  franchises  in  the 
County  of  New  York  for  said  year,  viz.:  by  tak- 
ing 89%  thereof,  amounting  to  $10,606,075.71  (p. 
615,  fol.  1845;  final  order  p.  721,  fol.  2168). 

Statement  of  Facts. 

We  have  set  forth  with  some  fullness  in  the 
brief  relating  to  the  year  1900  the  situation  of  the 
law  and  the  facts  applying  to  the  alleged  special 
franchise  in  Park  Avenue.  It  is  deemed  unneces- 
sary to  repeat  this  statement  here.  As  already 
stated,  the  assessment  for  1908  included  the  sub- 
surface rights  in  the  said  streets,  45th  to  49th 
inclusive,  at  the  Terminal,  and  also  the  southerly 


half  of  the  bridge  over  the  Harlem  River.  The 
Referee,  and  the  Courts  below,  held  that  the 
bridge  did  not  constitute  a special  franchise 
within  the  meaning  of  the  tax  law,  and  instead 
of  ascertaining  what  the  franchise  value  of  the 
southerly  half  of  the  bridge  was,  and  adding  to 
that  the  ascertained  value  of  the  physical  prop- 
er! j*,  and  deducting  the  sum  of  these  items  from 
the  total  assessment,  they  merely  deducted  from 
the  total  assessment  the  value  of  the  physical 
property  testified  to  on  the  trial.  The  Courts  sus- 
tained the  defendant  tax  commissioners  in  assess- 
ing the  railroad  in  Park  Avenue  and  the  subsur- 
face rights  in  the  cross  streets  as  special  fran- 
chises, and  also  sustained  the  general  assessment 
of  the  alleged  special  franchise  in  Park  Avenue 
on  the  same  ground  as  in  the  1900  case,  viz.,  that 
there  was  no  sufficient  evidence  before  the  Court 
to  justify  a re-appraisal,  and  that,  therefore, 
there  was  a failure  on  the  part  of  the  relator  to 
produce  evidence  clearly  indicating  that  the  as- 
sessment made  by  the  Tax  Board  was  in  any 
event  excessive,  or  more  than  the  true  value  of 
the  property. 

Another  distinction  between  this  case  and  that 
for  1900  should  be  noted.  In  the  1900  case  the 
defendant  Tax  Commissioners  were  sworn  as 
witnesses,  and  testified  to  their  procedure  in  fix- 
ing the  Park  Avenue  assessment,  showing  the 
method,  or  rather  lack  of  method  which  they  fob 
lowed.  The  Tax  Commissioners  for  the  year  190'^ 
were  duly  served  with  subpoenas  to  attend  and 
testify  before  the  Referee.  These  sub])oenas 
were  vacated  on  their  application  b}'  the  Supreme 
Court,  Mr.  Justice  Betts  sitting  (f).  493,  fol. 
1477)  on  the  ground  that  whatever  information 
the  Court  was  entitled  to  as  to  the  modus  oper- 


4 


andi  followed  by  the  Tax  Commissioners  in  fixing 
the  assessment,  was  obtainable  from  an  amended 
return.  It  will  be  noted  that  the  original  return 
(p.  44,  fob  130)  entirely  fails  to  disclose  the 
method  or  modus  operandi,  if  any,  followed  by 
the  Tax  Commissioners.  An  amended  return, 
pursuant  to  the  decision  of  Mr.  Justice  Betts, 
was  filed  l)y  the  Defendant  Tax  Commissioners 
(p.  51,  fob  151),  but  it  differs  only  from  the  or- 
iginal return  l)y  adding  a quantity  of  words  which 
have  no  meaning  beyond  conveying  generalities 
and  which,  therefore,  do  not  in  the  slightest  re- 
spect enlighten  the  Court  as  to  the  method  pur- 
sued. Further  facts  will  be  stated  under  the  re- 
spective points. 


FIRST  POINT. 

The  State  Board  of  Tax  Commissioners 
was,  and  is,  withont  jurisdiction,  because 
the  railroad  of  the  Relator  in  Park  Ave- 
nue had  been  built,  maintained  and  oper- 
ated long  prior  to  the  coming  into  exist- 
ence as  a public  street  of  the  strip  of  land 
on  which  it  was  so  constructed,  maintained 
and  operated,  and  the  avenue  when  opened 
was  opened  subject  to  the  prior  rights  of 
the  railroad. 

Exactly  the  same  statement  of  facts,  argument 
and  citation  of  authorities  which  is  contained  un- 
der the  I^'irst  Point  of  the  1900  lirief  is  applicable 
here,  and  to  avoid  mere  mechanical  repetition  we 


o 


respectfully  refer  the  Court  to  the  First  Point  i ' 
the  1900  brief. 

We  also  invoke  the  proposition  therein  set 
forth  with  reference  to  the  admittedly  erroneous 
inclusion  of  the  southerly  half  of  the  Harlem 
bridge  in  the  assessment,  the  Tax  Commission- 
ers ha\dng  afforded  no  basis  of  separation  in  their 
return,  that  illegal  element  having  been  blended 
in  a single  inseparable  assessment,  the  whole 
must  fall  as  illegal. 


SECOND  POINT. 

The  State  Board  of  Tax  Commissioners 
having  presumably  adopted  the  theory  of 
earnings  in  determining  the  intangible 
element  in  special  franchise  assessments 
in  New  York  County,  their  assessment  of 
the  intangible  element  in  the  alleged 
Special  Franchise  in  Park  Avenue  should 
be  tested  by  the  application  of  that  theory. 
Relator's  findings  on  this  subject  were 
erroneously  refused. 


As  has  been  shown  in  the  brief  for  the  year 
1900,  while  the  aflirmance  was  nnanimons  dis- 
cussion of  the  subject  is  still  open,  since  relator 
presented  certain  requests  to  the  Referee  and  the 
Court  at  special  term  which  were  refused  (fols. 
1903-1908,  1910-1912,  1933-1950),  and  exception 
to  such  refusal  duly  taken  (fols.  2218-2223). 

In  a general  way  as  to  the  alhjged  special  fran- 
chise in  Park  Avenue  itself,  as  distinct  from  the 


(■> 


subsurface  rights  in  the  cross  streets,  and  the 
southerly  halt  of  the  ilarlem  River  bridge,  our 
argument  under  this  point  is  substantially  the 
same  as  under  the  Second  Point  in  the  brief  for 
the  year  1900,  herewith  submitted.  There  are,  of 
course,  some  differences  of  fact,  though  not  such 
as  to  affect  the  general  result. 

Mr.  Hoyt  testified  that  the  value  of  the  tangi- 
ble property  in  Park  Avenue  as  distinct  from  the 
structures  under  the  surface  of  the  cross  streets, 
and  the  railroad  bridge,  was  the  sum  of  $5,294,- 
100  (p.  116b,  fob  348e).  The  addition  over  the 
value  given  for  the  year  1900  is  in  part  due  to 
electrification  and  to  new  structures  placed  in  the 
interim  over  the  lower  portion  of  Park  Avenue 
incident  to  the  reconstruction  of  the  Grand  Cen- 
tral Terminal.  With  reference  to  the  structures 
erected  within  the  street  lines  and  included  within 
the  assessment  for  the  so-called  subsurface 
rights  Mr.  Hoyt  prepared  a map,  which  was  re- 
ceived in  evidence,  and  marked  Exhibit  T-08,  and 
is  reproduced  in  the  Appendix,  (p.  932).  The 
total  value  of  these  structures  excluding  the 
street  viaducts,  the  property  of  the  City,  and 
which  are  paid  for  by  the  City  under  the  terms  of 
the  contract,  and  the  Act  of  1903,  reaches  the  sum 
of  $234,^576  (p.  126,  fob  377). 

These  computations  of  Mr.  Hoyt  were  not  ques- 
tioned by  any  one,  and  were  found  by  the  Referee 
and  the  Court  as  the  value  of  the  structures  un- 
der consideration  (p.  556,  fob  1667). 

Mr.  Hoyt  also  valued  the  structures  comprising 
the  southerly  half  of  the  Harlem  River  l)ridge, 
and  lying  between  the  southerly  bulkhead  line 
and  tlie  middle  line  of  the  draw  ]uer,  which  it  a])- 
pears  is  a little  north  of  the  dividing  line  ])etween 
the  Borough  of  The  Bronx  and  the  Borough 
Manhattan,  at  the  sum  of  $312,461  (p.  127,  fob 


381),  wliicli  was  the  figure  found  by  the  Referee 
and  the  Court  (p.  556,  fob  1666).  "We.have  then 
a total  value  of  tangible  property  iuvolved  in  this 


assessment  of 

Structure  in  Park  Avenue „....$5,294,100 

Structures  under  cross  streets 234,676 

Southerly  half  of  Harlem  bridge 312,461 


$5,841,237 

The  total  final  assessment  of  the  de- 
fendant Tax  Commissioners  was $12,299,400 

Deduct  from  this  total  value  tangi- 


ble property  5,841,237 

And  the  difference  of  $ 6,458,163 


represents  the  value,  as  near  as  it  can  be  obtained, 
which  was  placed  by  the  Tax  Board  upon  the  in- 
tangible elements  in  these  special  franchises. 

Judging  from  the  assessments  made  by  the 
Board  for  the  prior  j'ears  beginning  with  1900, 
the  plain  inference  is  that  this  sum  indicates  sul)- 
stantial  increases  in  the  estimate  of  the  intangi- 
ble element  on  the  part  of  the  Board  for  the  rail- 
road proper  in  Park  Avenue  from  45th  Street  to 
a point  near  1.33rd  Street,  and  also  includes  what- 
ever valuation  was  made  by  the  Board  of  the  in- 
tangible element  both  in  the  southerly  half  of  the 
Harlem  bridge,  and  in  the  so-called  subsurface 
rights  in  the  cross  streets  from  45th  to  49th 
street.  Just  how  these  sums  are  to  be  ai)por- 
tioned,  or  were  ay)portioned  by  the  defendant 
Tax  Commissioners  does  not  appear.  The  R(‘- 
lator  exhausted  its  legal  remedies  to  secure  evi- 
dence of  the  facts;  its  subpoenas  were  vacated, 
and  it  was  relegated  to  an  amended  rcdiirn,  which 
is  no  return  at  all,  and  does  not  indicate  in  the 
slightest  way  the  method  followed  by  the  Board, 
or  the  various  items,  or  the  anionnt  of  the  items, 


8 


Trhicli  entered  into  the  sum  total  which  they  fixed. 

The  Court  of  Appeals  has  twice  held  that  the 
Court  is  entitled  to  have  such  information  fur- 
nished in  the  return  to  the  writ. 

People  ex  rel.  Buffalo  Gas  Co.  v.  State 
Board  of  Tax  Com’rs,  199  N.  Y.,  162; 
People  ex  rel.  Lehigh  Valley  E.  R.  Co.  vs. 
Same,  199  N.  Y.,  167. 


We  beg  to  call  attention  to  the  observations, 
without  repeating  them,  which  we  made  in  regard 
to  the  burden  of  proof  in  the  1900  brief.  A writ 
of  certiorari  is  a mere  mockery,  and  it  is  impos- 
sible to  obtain  any  review  of  an  assessment  by 
the  defendant  Tax  Commissioners  if  the  views  of 
the  learned  Referee,  and  the  Courts  below,  are 
to  prevail.  The  ruling  of  the  Court  of  last  re- 
sort debars  us  from  producing  any  expert  opin- 
ion evidence  of  the  value  of  these  intangible 
rights,  and  every  item  which  would  throw  any 
light  upon  the  value  of  these  intangible  rights  as 
drawn  from  the  actual  operations  of  the  Com- 
pany are  before  the  Court. 

Mr.  Foulds  of  the  Auditing  Department,  in  the 
present  case  made  a presentation  of  the  earnings 
of  this  stretch  of  track  on  the  mileage  basis,  citing 
the  same  elements  of  computation,  as  in  the  1900 
case.  That  statement  is  inserted  at  page  132, 
folios  394  to  412  of  the  record,  and  is  as  follows: 


9 


Statement  showing  method  of  ascertaining 

GROSS  EARNINGS  OF  THAT  PORTION  OF. THE  NeW 

York  & Harlem  Eailroad  in  Park  Avenue 
BETWEEN  -lOTH  STREET  AND  133rD  StREET,  AND 
AMOUNT  OF  SUCH  EARNINGS  FOR  THE  YEAR  END- 
ING December  31,  1907. 

First  : Earnings  from  operation  of 
N.  Y.  C.  & H.  K.  R.R.  Co. 

(a)  Passenger  earnings. 

Total  passenger  earnings $24,133,013.99 

Commutation,  school  and  fam- 
ily ticket  earnings  1,433,795.62 

Earnings  from  single  trip, 
round  trip  and  mileage 

passengers  carried  22,699,218.37 

Total  number  of  single  trip, 
round  trip  and  mileage  pas- 
sengers carried  25,687,890. 

Total  number  of  miles  trav- 
eled by  total  number  of  pas- 
sengers carried  1,389,340,246 

Earnings  per  mile  per  (ordi- 
nary) passenger  $.01911 

Total  number  commutation 

passengers  carried  9,468,836. 

Total  number  of  miles  trav^eled 
by  total  number  commutation 

passengers  carried  201,768,381. 

Earnings  per  mile  per  commu- 
tation passenger  ^ $.00711 

Distance  from  45tb  St.  to  133d 

St - - 4- 4.44  miles 

Number  of  ordinary  pas- 
sengers on  N.  Y.  C.  Lines 
at  C.  C.  S.  going  and  com- 
ing   - 3,597,516. 

Same,  125tb  Street 448,920 


10 


Number  of  commutation  pas-  ' 

sengers  on  N.  Y.  C.  Lines  at 
G.  C.  S.  going  and  com- 
ing   5,980,990. 

Same,  125tli  Street  306,249. 

Earnings  from  commutation 

sengers  $308,760.81 

Earnings  from  commutation 
passengers 189,703.04 


(a)  Total  passenger  earnings  $498,463.85 

(b)  Mail  earnings. 

Amount  paid  by  Government 
per  mile  of  Road. 

New  York  and  Buffalo  route $4,191.47 

New  York  and  Cliatliam  route 139.14 

Railway  Mail  Service,  N.  Y.  to 
Buffalo  546.97 


Total  $4,877.58 

Earnings  per  mile  of  road $4,877.58 

Number  miles  of  track  in- 
volved   4.44 

Total  mail  earnings  $21,656.46 

(c)  Earnings  from  express. 

Total  earnings  on  N.  Y.  C $3,131,127.95 

Total  miles  of  railroad  in 

volved  3,195.77 

Amount  of  earnings  v $4,350.19 

(d)  Excess  baggage. 

Total  earnings  on  N.  Y.  C $203,181.91 

Total  miles  of  railroad  in- 
volved   3,195.77 

Amount  of  earnings $282.29 

Second:  Earnings  from  operation 
N.  Y.,  N.  IT.  & 11.  R.R.  Co. 

(a)  Passenger  earnings. 

Total  payments  on  passengers 

carried  $787,863.60 


11 


Number  of  miles  43rd  St.  to 


Woodlawn  Jimction 12.4.3 

Total  passenger  ijayments $281,425.13 

(b)  Mail,  express  and  baggage $45,196.01 

Total  payments  $16,144.03 

Recapitulation. 

From  N.  Y.  C.  & H.  R. 

R.  R.  Co. 


Passenger  earnings  $498,463.85 

Mail  earnings  21,656.46 

Express  earnings  4,350.19 

Excess  baggage  282.29 

$524,752.79 

From  N.  Y.,  N.  11.  & H. 

R.  R.  Co. 

Passenger  earnings  $281,425.13 
Mail,  express  and 

baggage  16,144.03 

$297,569.16 


Grand  total  — $822,321.95 

Mr.  Odell’s  testimony  with  reference  to  esti- 
mate of  passenger  earnings  through  the  Park 
Avenue  gateway  was  given  for  the  year  1908  on 
the  same  theory  as  for  the  year  1900,  and  the  dis- 
cussion under  tliat  year  will  apply  equally  here. 
Under  the  basis  which  he  adopts,  the  total  earn- 
ings coming  through  the  Park  Avenue  gateway 
for  the  year  ending  December  31,  1907,  were  $9.- 
511,725  (Appendix,  page  1103,  fol.  3307),  out  of  a 
total  earnings  from  passenger,  mail  and  express 
of  $36,190,744.  Presenting  Mr.  Odell’s  figures 
upon  the  mileage  j)roportion  attributable  to  the 
4.44  miles  of  railroad  constituting  the  alleged 
spiM’ial  franchise  in  Park  Avenue,  the  statement 
is  made  up  as  follows: 


12 


Earnings  per  passenger  mile  as  de- 
rived from  the  Company’s  annual 
report  ending  December  31,  1907 : 

(a)  Ordinary  passengers  including 

mail  and  express $.0233988 

(b)  Commutation  passengers 

(school  and  family  tickets) $.00711 


No.  of  ordinary  passengers  Grand 
Central  Terminal : 

T.ocal  3,043,207 

Inter-line,  East  of  Ni- 
agara Frontier  290,953 

Inter-line,  West  of  Ni- 
agara Frontier  263,356 

3,597,510 

No.  commutation  passengers  Grand 


Central  Terminal  6,287,239 

3,597,516  X 4.44  x .0233988=  $373,748.35 

6,287,239  x 4.44  x .00711  = $195,965.69 


$569,714.04 

Compare  this  with  Mr.  Foulds’  presentation  of 
earnings  from  New  York  Central  and  Hudson 
River  Railroad  Company  operation  for  the  year 
ending  December  31,  1907,  to  wit,  $524,752.79. 

As  we  have  already  pointed  out.  Relator  was 
debarred  from  examining  the  defendant  Tax 
Commissioners  in  this  case  as  to  the  methods 
adopted  by  them  in  making  the  assessments  in 
question,  or  as  to  the  separate  valuation  of  the 
items  included  in  the  total  and,  as  Ave  have  also 
pointed  out,  the  return,  and  amended  return  of 
the  defendant  Tax  Commissioners  contain  no  en- 
lightenment on  the  sulqect.  From  1900  to  1906 
while  Messrs.  Priest,  Stearns  and  Ilalpin  were 
members  of  the  Board,  we  have  their  testimony 
in  the  1900  record,  argued  herewith,  tliat  the 


13 


Board  followed  the  same  method  in  New  York 
County  special  franchise  assessments,  viz.,  of 
taking  a percentage  not  exceeding  live  of  the 
gross  receiiDts,  and  dividing  by  the  tax  rate,  the 
quotient  being  the  value  of  the  intangible  ele- 
ment, the  apparent  theory  of  the  Commissioners 
being  that  the  owner  of  a special  franchise  ought 
to  pay  as  taxes  the  tax  rate  applied  to  the  value 
of  the  tangible  property  plus  5%,  or  less,  of  its 
gross  receipts  from  the  operation  of  such  fran- 
chise. As  the  assessments  in  question  from  the 
years  1900  to  1908  have  moved  upward  steadily 
from  year  to  year  in  response  to  an  assumed  in- 
crease in  the  amount  of  business  done  over  the 
alleged  special  franchise,  we  think  it  fair  to  as- 
sume that  the  members  comprising  the  defendant 
Board  of  Tax  Commissioners  accepted  as  an  in- 
heritance the  assessments  of  the  former  Board, 
and  have  simply  increased  them  somewhat  from 
year  to  year  in  response  to  the  idea  of  a sup- 
posed increase  in  traffic. 

Upon  the  assumption,  therefore,  that  the  gross 
earnings  basis  may  be  used  to  test  the  assessment 
in  the  case  at  bar,  and  upon  the  further  assump- 
tion that  nothing  shall  be  deducted  whatever  for 
oj^erating  expenses,  although  the  latter  are  con- 
cededly  very  heavy,  if  we  take  the  gross  income 
apportioned  on  the  mileage  basis  and  ai)ply  the 
principle  of  assessment  above  described,  the  fol- 
lowing presentation  results : 

Gross  income  (Foulds)  New  Yoi’k 


Central  operation  (fob  412) 


Paid  by  New  Haven  Company  for 
trackage  


280,0. '34.89 


Total  gross  income.^ $828,438.1 1 


14 


5%  of  the  foregoing  is  $41,421.9055 
which  divided  by  the  tax  rate  for 
1908  (fol.  1671),  viz.,  .0161407  pro- 
duces as  the  value  of  the  intangible  $2,566,301.00 
To  which  add  the  value  of  the 
tangible  as  testified  to  by  Mr.  Hoyt 
and  as  found  by  the  Court  below 5,294,100.00 


Total  assessment  at  full  value $7,860,401.00 


which  when  equalized  by  taking 
the  found  ratio  (fol,  1670)  of  89% 
produces  an  equalized  assessment 

of $6,973,756.89 

If  we  follow  the  computations  of  the  defend- 
ants’ expert,  Mr.  Odell,  apportioning  to  the  al- 
leged special  franchise  its  share  on  the  mileage 
basis,  we  obtain: 

Gross  income.  New  York  Central 

operation  $569,714.04 

Paid  by  New  Haven  Company  for 
trackage  rights 286,654.89 


Total  gross  income $856,368.93 

5%  of  the  last  mentioned  amount 

is  $42,818.4465 

dividing  this  amount  by  the  tax 
rate  of  .0161407  we  get  as  the 

value  of  the  intangible $2,652,824.00 

to  which  add  the  value  of  the  tan- 
gible as  found  by  the  Court  below  5,294,100.00 

which  makes  the  total  assessment 

at  full  value $7,946,924.00 


equalizing  it  by  taking  89%  there- 
of as  found  by  the  Court  for  the 
year  in  question  we  get  an  equal- 
ized assessment  of $7,072,772.36 


15 


which  we  respectfully  submit  is  the  utmost  pos- 
sible assessment  which  the  facts  upon  the  assump- 
tion stated  will  warrant. 

Upon  the  same  basis  and  with  the  same  ele- 
ments of  computation  as  were  placed  before  the 
Court  in  the  proceeding  for  1900,  the  Relator 
proved  by  the  testimony  of  Mr.  11.  L.  Ingersoll, 
the  expenses  involved  in  operating  the  alleged  spe- 
cial franchise  on  Park  avenue.  The  figures  for 
maintenance  of  way,  station  employes,  heat,  light 
and  supplies  at  stations,  towermen  and  accidents 
being  the  actual  expenses  incurred,  and  the  ex- 
pense of  moving  passenger  trains  and  shop  trains 
being  in  itself  not  susceptible  of  precise  statement 
is  based  upon  an  average  derived  from  the  gen- 
eral operations  of  the  Relator’s  railroad  system, 
an  average  which,  as  we  have  shown  in  the  1900 
brief,  is,  if  anything,  unfavorable  to  the  Relator, 
since  the  expense  of  moving  these  trains  is  larger 
than  the  average  by  reason  of  the  increased  num- 
ber of  trainmen  necessary  on  the  suburban  trains, 
and  the  frequent  stops  and  delays  involving  loss 
of  trainmen’s  wages  to  the  Relator,  caused  by 
the  frequent  congestion  which  occurs  in  a crowded 
terminal.  Mr.  Ingersoll ’s  testimony  is  as  follows: 

Operating  expenses  for  the  year  encling  Decem- 
ber .31,  1907,  are  as  follows  (p.  224,  fob  070) : 

“Expenses  of  Harlem  Line,  between  45th  Street 


and  133rd  Street. 

Calendar 
Year  1907. 

Maintenance  of  way $2H3,077.17 

Station  employes 15,t)70.87 

Heat,  Idght  and  suf)plies  18,741.71 
Towennen  43,822.93 


16 


Cost  of  passenger  cars, ....  242,777.65 

Cost  of  slio})  ears 149,785.47 

Accidents  102,549.78 

Executive  expense 85,852.56 

$941,408.14 

If  we  atteinj)t  to  deduct  the  total  of  $941,408.14 
from  the  gross  income  for  the  year  ending  De- 
cember 31,  1907,  viz.,  $822,321.95,  we  have  a defi- 
cit in  operating  expenses  alone  of  $119,086.19, 
The  very  great  addition  in  the  expense  of  mov- 
ing trains,  both  passenger  and  shop,  is  evident  if 
this  statement  he  compared  with  that  produced 
for  the  preceding  years,  and  this  was  explained 
by  Mr.  Ingersoll  as  l)eing  due  to  the  very  great 
increased  expense  in  the  electric  operation  of  this 
stretch  of  road.  He  thought  that  it  cost  possibly 
100  per  cent,  more  for  electric  engine  service  than 
for  steam  engine  service  (fob  673).  As  the  oper- 
ation by  electricity  was  forced  upon  the  railroad 
company  l)y  the  legislature  (Ch.  425,  L.  1903,  p. 
831,  fol.  2491),  due  notice  of  this  large  increase  in 
operating  expenses  seems  particularly  appropri- 
ate. 

Mr.  Ingersoll  testified  on  this  subject  as  follows 
ip.  225,  fol.  673)  : 

“Q.  Just  explain  to  the  Court  what  this 
electrical  service  is  of  which  you  speak?  A. 
Well,  there  was  formerly  just  railroad  tracks 
there  with  signals.  Of  course  the  permanent 
way  was  constructed  in  a manner  that  has 
been  testified  to  here  and  described.  The 
trains  were  hauled  by  an  ordinary  steam  loco- 
motive, which  was  a complete  motive  ])ower 
unit  in  itself.  The  electric  trains  are  hauled 
by  the  motor  which  in  the  first  instance  costs 
prol)a])ly  nearly  double  the  cost  of  steam  loco- 
motives, and  it  is  dependent  for  its  power 


17 


upon  a very  elaborate  transmission  system 
and  third  rail  and  a very  costly  i)Dwer  gen- 
erating station.  Of  course  the  operating  ex- 
l)ense  and  maintenance  expense  of  that  plant 
is  distributed  over  the  load  that  it  carries. 
The  load  that  these  power  plants  carry  and 
the  transmission  lines  is  the  load  of  the  elec- 
tric division,  the  electric  engine  seiwice  and 
the  electric  train  service  of  the  electric  divi- 
sion.” 

In  the  1900  brief  we  have  noticed  the  criticisms 
of  the  Referee  upon  the  Relator’s  method  of  pre- 
senting these  expenses,  which  we  need  not  repeat 
here.  It  will  not  be  questioned  that  the  expenses 
are  at  any  rate  heavy.  According  to  the  annual 
report  of  the  Relator  to  its  stockholders  for  the 
year  ending  December  31,  1907,  which  the  de- 
fendants placed  before  the  Court,  the  operating 
ratio  was  77.06%.  As  this  stretch  of  track  is  one 
of  the  most  expensive  to  maintain  in  the  country, 
it  is  doing  an  obvious  injustice  to  the  Relator  to 
use  this  percentage.  However,  applying  it  to  the 
gross  earnings  of  this  alleged  special  franchise 
of  $828,438.11,  as  testified  to  by  Mr.  Foulds,  i1 
appears  that  the  cost  of  operation  would  be  not 
less  than  $638,394.41;  this  would  yield  a surplus 
or  net  earnings  of  $190,043.70.  If  we  a[)f)ly  the 
theory  of  net  earnings  as  set  forth  by  Judge  Bart- 
lett in  the  opinion  of  the  Court  of  Ajjpeals  in  the 
Jamaica  Water  Supply  Company  case,  it  would 
appear  that  the  Relator  is,  at  least,  entitled  to  a 
return  of  6%  calculated  upon  the  value  of  the  tari- 
gible  property  nec(*ssarily  used  in  the  operation 
of  the  alleged  special  franchise.  The  value  of 
such  tangible  jmoperty  in  the  alleged  special  fran- 
chise itself,  and  exclusive  of  the  terminal  property 
and  the  Mott  Haven  yanl,  or  any  proportion 


IS 


thereof,  which  is  also  used  in  securing  these  earn- 
ings is,  as  found  hy  the  Court,  the  sum  of  $5,- 
294,100.  Six  per  cent,  upon  the  sum  last  stated 
amounts  to  $317,646,  indicating  a deficit  of  $127,- 
602.30,  which  must  be  overcome  before  any  sub- 
stantial value  can  be  asserted  to  be  attached  to 
the  intangible  element  in  the  alleged  special  fran- 
chise. 

If  we  take  Mr.  Odell’s  computations  of  the 
gross  earnings  through  the  Park  Avenue  gateway 
and  apportion  them  on  the  mileage  basis,  which 
he  testified  was  the  only  proper  basis,  we  should 
still  have  a deficit. 

The  Intervening-Defendant,  the  City  of  New 
York,  presented  to  the  Referee,  and  the  Court  be- 
low, in  this  case,  as  in  the  1900  case,  a computa- 
tion of  the  gross  earnings  made  through  the  Park 
Avenue  gateway,  and  of  the  supposed  expense  to 
the  Relator  of  achieving  those  earnings,  and  of 
the  deductions  to  which  the  Relator  is  entitled  be- 
fore any  valuation  can  be  predicated  upon  the  in- 
tangible element.  The  presentation  for  the  year 
1908  is  upon  the  same  basis,  and  using  the  same 
elements  of  calculation  as  in  that  of  1900.,  To 
avoid  needless  repetition,  w^e  beg  to  refer  the 
Court  to  that  portion  of  our  brief  for  the  year 
1 900  which  deals  with  this  presentation. 

As  both  records  are  before  the  Court,  some  com- 
parison of  results  will  prove  enlightening.  For 
the  year  1900,  for  example,  the  defendants’  wit- 
ness, Mr.  Odell  (See  1900  record,  p.  696,  fob  2088), 
finds  that  out  of  a total  passenger,  mail  and  ex- 
press earnings  of  $16,677,136  derived  from  the 
entire  system  of  railroads  operated  by  the  Relator 
and  earned  in  1899,  $9,672,749  represents  the  pro- 
portion thereof  by  reason  of  the  use,  among  other 
instrumentalities  of  this  alleged  special  franchise; 


19 


that  is,  derived  through  the  Park  Aveuue  gate- 
way. Ill  the  year  1907  (See  record  for  1908,  Ap- 
pendix, page  1103),  he  finds  that  out  of  a total 
gross  earnings  for  the  system  of  railroads  oper- 
ated liy  the  Relator  of  $36,190,744  only  $9,511,725 
were  obtained  through  the  use  of  the  alleged  spe- 
cial franchise  in  Park  Avenue. 

This  is  a remarkable  falling  olf,  both  absolutely 
and  relatively.  It  would  seem  as  if  this  alleged 
special  franchise,  leading  into  the  “heart  of  New 
York,”  was  not  quite  so  valuable  as  the  defend- 
ants would  like  to  have  the  Court  think  it. 

For  the  year  1900,  upon  a gross  income,  as 
stated,  of  $9,672,749  the  defendants  worked  out 
a valuation  of  the  intangible  element  in  the  al- 
leged special  franchise  of  $69,935,616,  whereas  for 
the  year  1908,  with  gross  earnings  of  $9,511,725 
about  $160,000  less  than  in  1900,  the  value  of  the 
intangible  element  had  dropped  to  $33,506,133  (p. 
706,  fol.  2117).  Or,  for  the  purpose  of  earning 
substantially  the  same  sum  it  was  only  half  as 
valuable  in  1908  as  in  1900. 

It  is  hardly  surprising  that  neither  the  Referee, 
nor  the  Court,  placed  any  value  upon  this  pre- 
sentation, and  refused  all  of  the  findings  pro- 
posed by  the  defendants  with  reference  thereto. 

In  our  brief  for  1900  we  attemj)ted  a compari- 
son of  the  earnings  of  this  alleged  special  fran- 
chise upon  the  basis  adoi)ted  by  the  defendants. 
Assuming  without  conceding,  the  i)ostuIates 
wliich  they  provided,  excei)t  instead  of  taking  the 
loaded  ear  mileage  theory  without  distinction  be- 
tween passenger  and  freight  operation,  we  have 
applied  the  ratio  as  set  forth  in  the  Company’s 
report  to  its  stockhohlers,  between  gross  earn- 
ings and  oi)erating  expenses,  which  for  the  year 
1907  was  77.06%.  If  there  is  any  value  whatever 
in  this  theon’  of  presentation  we  submit  that  this 


20 


ratio  is  the  fairest  and  most  reasonable  approxl 
mation  that  can  be  taken,  there  l)eing  no  sepa- 
rate acconnt  kept,  or  any  acconnt  possible  to  be 
kept,  of  the  expenses  of  making  the  freight,  as 
distinct  from  the  passenger,  mail  and  express, 
earnings. 

Repeating,  therefore,  the  presentation  that  was 
made  for  the  year  1900,  and  making  the  proper 
changes  in  the  figures,  the  statement  works  ont 
as  follows : 

Gross  earnings  for  the  year  end- 
ing December  31,  1907,  from 
passengers,  mail  and  express 
business  on  the  entire  system  as 
derived  from  the  company’s  re 
port,  and  as  stated  by  Mr.  Odell, 
is  the  sum  of $36,190,744.00 


The  ratio  between  income  and  op- 
erating expenses  as  shown  by 
the  report  is  77.06%. 

77.06%  of  sum  last  stated 
would  be 27,888,588.33 


Leaving  net  earnings  on  passen- 
ger, mail  and  express,  of $8,302,155.67 

]\fr.  Odell’s  computation  of  gross 
earnings  in  connection  with  the 
alleged  special  franchise  shows  ...  9,511,725.00 
Of  which  77.06%  would  be 7,329,735.29 


T.,eaving  net  over  operating  cost  of  $2,181,989.71 
Tn  this  assumption  we  are  gener- 
ous to  defendants  and  unjust 
to  relator.  From  the  general 
situation  at  tliis  terminal  it  is 
manifest  tliat  the  average  per- 
centage of  cost  of  operation  to 


21 


gross  earnings  made  through 
the  Park  Avenue  gateway  is 
greater  than  on  the  system  gen- 
erally. 

To  this  add  trackage  rental  from 
"Woodlawn  to  G.  C.  T.  paid  by 
the  Xew  Haven  Company  (fol. 

410)  $802,504.58 


Total  earnings  charged  against  re- 
lator   $2,984,494.29 

AVe  now  come  to  a statement  of  the  deductions 
which  under  the  theory  of  the  defendants  should 
be  made  from  this  gross  sum  in  order  to  arrive  at 
the  strictly  net  returns  from  the  alleged  special 
franchise  which  capitalized  forms  the  value  of  the 
intangible  element. 

The  total  value  of  the  plant  of  The 
New  York  Central  and  Hudson 
River  Railroad  Company,  cost 
of  road  and  equipment,  as  found 
on  page  44  of  the  annual  report 
and  as  used  by  the  defendants,  is  $215,869,940.51 
From  this  should  be  deducted  tlie 
amount  of  capital  invested  in 
tangible  property  in  alleged 
special  franchise,  and  in  real 
estate  in  the  Grand  Central  Ter- 
minal, and  at  Mott  Haven  yard, 
exclusive  of  the  real  estate  which 
earns  a rental  from  outside  par- 
ties, and  exclusive  of  that  por- 
tion of  the  Grand  Central  Ter- 
minal property,  viz:  3.3%,  on 
which  the  New  Haven  Company 
pays  a rental  as  shown  as  fol- 
lows : 


00 


The  total  assessed  value  of  the 
Grand  Central  Terminal  prop- 
erty was  (p.  537,  fols.  1609- 

1612)  $14,736,000.00 

which  according  to  stipulation  is 
89%  of  full  value,  which  would 
be  , 16,355,056.00 


Portions  of  this  property  not 
wholly  used  for  railroad  pur- 
poses were  let  to  tenants  for  an 
aggregate  rental  of  $74,237.61. 

Capitalized  at  6%  the  latter  figure 

represents  1,237,294.00 


The  remainder  of $15,117,762.00 

represents  capital  devoted  to 
wholly  railroad  purposes. 

The  New  Haven  Company  paid 
interest  on  33%  of  this  amount 
under  the  terms  of  the  Tripar- 
tite' lease  in  evidence. 

Deducting  33%  of  this  capital  or  4,988,861.00 


The  remainder  

represents  capital  employed  ex- 
clusively by  relator  at  the 
Grand  Central  Terminal. 

The  assessed  value  of  the  IMott 
Haven  yard  (for  use  of  which 
the  New  Haven  Company  paid 
nothing)  was  $2,539,800  (p.  539, 
fob  1617),  being  89%  of  full 

value,  or 

The  rental  received  for  non-rail- 
road uses  is  $1,835,  which,  capi- 
talized at  6%,  represents  a de- 
duction of  $30,583,  leaving  net 
capital  investment  in  Mott 
Haven  yard  of 


$10,128,901.00 


2,853,708.00 


2,823,125.00 


The  total,  or. 


$12,952,026.00 


represejilted  capital  invested  in 
real  property  outside  the  al- 
leged special  franchise  and  nec- 
essary to  the  operation  thereof. 

To  this  add  the  value  of  the  tan- 
gible in  the  alleged  special  fran- 
chise as  found  by  the  Court 5,294,100.00 


This  amount  is $18,246,126.00 

Leaving  a balance  of  capital  in- 
vested outside  of  the  terminal 
of  - - $197,623,814.51 


The  next  step  in  the  problem  is  to  ascertain 
how  much  of  the  foregoing  capital  is  assignable 
to  the  use  thereof  for  freight  earnings,  and  the 
use  thereof  for  passenger,  mail  and  express 
earnings. 

Turning  again  to  the  annual  report,  we  find  that 

out  of  the  entire  earnings $98,369,059.55 

the  total  passenger,  mail  and 
express  earnings  as  sho^^^^  by 

]\fr.  Odell  are , 36,190,744.00 

or  36.77%. 

Taking  36.77%  of  $197,623,814.51 


we  have 

as  the  proportion  of  capital 
outside  of  the  Grand  Central 
Terminal  and  outside  of  the 


72,527.999.93 


alleged  special  franchise  re- 
quired to  achieve  the  passen- 
ger, mail  and  express  earn- 
ings on  the  whole  system. 


Tt  now  remains  to  deteniiine  what  f)roportinn 
of  the  last  named  capital  is  assignable  to  that 
part  of  the  passenger,  mail  and  expi-ess  earnings 


24 


which  come  through  the  Park  Avenue  gateway. 
AVe  have  shown  above  that  the  net  earnings  from 
passenger,  mail  and  express  on  the  whole  system 


was  $8,302,155.67 

and  the  net  earnings  from  the 
same  source  through  the  Park 
Avenue  gateway  was 2,181,989.71 


being  a proportion  of  26.2%  of  the  net  earnmgs 
over  expense  of  operation  on  passenger,  mail  and 
express  business  on  the  entire  system.  It  seems, 
therefore,  that  26.2%  of  $72,527,999.93  would  rep- 
resent that  proportion  of  the  entire  capital  out- 
side of  the  terminal  used  in  producing  that  pro- 
portion of  the  net  earnings  from  passenger,  mail 
and  express  business  which  goes  through  the 
Park  Avenue  gateway. 

This  amounts  to $19,202,335.98 

Upon  this  capital  the  presentation 
of  the  defendants  concedes  that 
the  relator  is  entitled  to  a credit 
of  6%  as  a fair  return  on  the 

investment,  or 1,152,140.16 

which  forms  then  the  first  deduction. 

Outside  of  the  taxes  paid  upon  real  estate  used 
in  the  operation  of  the  alleged  special  franchise 
at  the  Terminal,  the  defendants  find  that  the  total 
fixed  charges  is  the  sum  of  $12,850,298.00  (fob 
2127).  The  relator  is  entitled  to  credit  for  the 
same  proportion  of  these  charges,  that  is  to  say, 
of  this  amount  first  take  36.7%  as  representing 
the  proportion  of  fixed  charges  assignable  to  pas- 
senger, mail  and  express  earnings  on  the  system 
generally,  or  $4,716,059.37  and  of  this  take  26.2% 
as  the  proportion  coming  through  the  Park  Ave- 
nue gateway,  which  amounts  to  $1,235,607.55,  and 
forms  the  second  deduction. 


VCe  have  shown  in  a previous  part  of  this  pre- 
sentation that  the  capital  invested  in  the  Grand 
Central  Terminal,  including  the  tangible  prop- 
erty in  the  alleged  special  franchise,  assignable 
to  relator’s  operation  is  $18,246,126.  On  this 
amount  the  relator  is  entitled  to  a fair  return  of 
6%,  or  $1,094,767.56. 

It  finally  remains  to  deduct  the  taxes  paid  by 
the  relator  upon  the  real  estate  used  in  connection 


with  the  alleged  special  franchise. 

As  shown  by  Mr.  Bronson’s  testi- 
mony (fol.  1612)  taxes  on  the 
Grand  Central  Terminal  prop- 
erty paid  in  1907  were $229,240.85 

Deduct  33  per  cent,  paid  by  the 
New  Haven  Company  under  the 
Tripartite  leas^i 75,649.48 


Net  paid  by  relator $153,581.37 

To  this  add  taxes  paid  on  Mott 
Haven  Yard  not  shared  in  by 
New  Haven  Company  (fol. 

1617)  40,994.14 


Total  $194,585.51 

which  forms  the  fourth  deduction. 


SUMMARIZING. 

DEBITS. 

Net  earnings  from  New  York  Cen- 
tral operation 

Paid  by  New  Haven  Company  for 
trackage  rental 


$2,181,989.71 

802,504.58 


$2,984,494.29 


Total 


20 


CKEDITS. 

6 per  cent,  on  outside 

capital  $1,152,140.16 

Proportion  of  fixed 

charges 1,235,607.55 

6 per  cent,  on  capital 
in  Grand  Central 
Terminal  property...  1,094,767.56 
Taxes  on  terminal 
property 194,585.51 


Total  credits $3,677,100.78 

Deducting  the  debits  this  leaves  a deficit  of 
$692,606.49  which  must  be  overcome  before  any 
value  more  than  nominal  can  be  assigned  to  the 
alleged  special  franchise  in  Park  Avenue. 

We  submit,  in  conclusion,  that  on  any  fair  an- 
alysis of  the  figures  submitted  to  the  Referee  the 
same  general  result  will  follow.  This  is  not  say- 
ing that  the  entrance  to  “the  heart  of  New  York 
City”  is  not  valuable  to  the  relator.  It  is  valu- 
able; but  as  in  the  case  of  most  valuable  things 
the  relator  pays  full  price  therefor  in  the  vast 
expense  attendant  on  the  maintenance  and  oper- 
ation of  this  most  expensive  part  of  its  railroad 
and  in  the  enormous  aggregate  of  taxes  which  it 
])ays  into  the  treasury  of  the  City  of  New  York 
upon  its  physical  property  used  in  connection  witli 
the  operation  of  said  stretch  of  track,  and  upon 
which  the  assessments  for  taxation  increase  year- 
ly by  leaps  and  bounds. 

The  Courts  having  determined  that  a corpora- 
tion or  person  exercising  an  alleged  special  fran- 
chise is  entitled  under  the  net  earnings  theory  to 
a deduction  of  6%  upon  the  value  of  property 
used  in  connection  with  the  alleged  special  fran- 
chise from  any  sum  which  represents  a surplus 


of  gross  earning  over  expenses  of  operation,  the 
impossibility  of  working  out  upon  any  rational 
basis  a substantial  value  in  the  intangible  element 
in  the  alleged  special  franchise  operated  by  the 
relator  is  seen  from  the  fact  that  the  relator  does 
not  and  cannot  realize  a return  of  6%  upon  its 
total  capital  invested  in  the  business  of  transpor- 
tation. Even  though  a considerable  portion  of 
that  capital  is  represented  by  bonds  bearing  a 
rate  of  interest  considerably  below  6%  it  does 
not  pay  and  is  unable  to  pay  a dividend  of  6% 
upon  the  balance  of  its  capital  invested  in  the 
railroad  in  New  York  State  operated  by  it.  Its 
ability  to  pay  five  or  six  per  cent,  upon  its  stock 
is  due  to  the  well-known  fact  that  as  a large 
stockholder  in  lines  running  west  of  Buffalo  it 
derives  a dividend  income  which,  in  conjunction 
with  the  very  low  percentage  of  net  earnings  on 
the  system  in  New  York  State,  enables  it  to  pay  a 
dividend  upon  its  stock  issue  varying  from  four 
to  six  per  cent. 

At  the  request  of  counsel  for  the  State,  the 
assessment  rolls  of  property  on  both  sides  of 
Park  Avenue  from  45th  Street  to  133rd  Street 
were  offered  and  received  in  evidence  over  tlie 
objection  of  the  Relator,  and  sulqect  to  its  motion 
to  strike  out  the  same,  on  which  decision  at  the 
time  was  resented  (p.  515,  fol.  1541).  The  Ref- 
eree in  his  opinion  (p.  710,  fob  2157)  sustains  tin* 
objections  of  the  Relator  and  grants  its  motion 
that  this  evidence  shoidd  be  stricken  out  (fol. 
2150).  "We  do  not  know  whether  the  defendants 
will  on  their  appeal  di.scuss  this  ruling.  The 
grounds  in  support  of  Relator’s  objection  to  tin* 
reception  of  tbe  evidence  are  pr(*tty  fully  stated 
in  tbe  record  in  the  discussion  of  counsel  which 
prefaced  their  introduction  (pp.  400  to  514;  folios 


28 


1487-1539).  As  indicated  in  the  opinion  of  the 
Referee,  merely  the  block  and  lot  numbers  of 
these  lots  abutting  on  both  sides  of  Park  Avenue 
were  given,  so  it  cannot  be  determined  what  lands 
are  involved  in  the  alleged  assessments.  The  ar- 
gument in  support  of  the  introduction  of  this  line 
of  evidence,  so  far  as  it  may  be  gathered  from 
statements  on  the  record  is,  summarily  stated, 
that  if  the  Relator  was  driven  off  Park  Avenue  at 
this  late  day  and  had  to  get  an  inlet  to  its  termi- 
nal at  42nd  Street  over  private  property  it  might 
have  to  pay  a very  large  sum,  and  that  such  sum 
as  it  might  have  to  pay  on  that  hypothesis  might 
be  shown  by  the  value  of  these  lots  abutting  on 
Park  Avenue,  and  that  its  present  right  to  be  in 
Park  Avenue  was  to  be  measured  by  what  it  would 
have  to  pay  to  acquire  private  property  for  an 
entrance. 

This  theory  is  quite  as  speculative  as  the  as- 
sumption would  be  that  if  the  road  were  by  legis- 
lative fiat  shifted  to  Fifth  Avenue  upon  an  ele- 
vated structure,  the  resulting  damages  to  abutters 
would  measure  the  value  of  its  present  right  to 
l)e  where  it  is. 

The  fact  was  further  pointed  out  to  the  Referee 
that  the  assessed  value  of  lands  abutting  on  Park 
Avenue  varied  directly  according  to  the  extent  to 
which  the  railroad  was  out  of  sight  by  reason  of 
very  expensive  structures  erected  by  the  railroad 
company,  and  to  a large  extent  paid  for  by  it,  con- 
serving to  a very  large  degree,  and  as  to  the 
tunnel  portion  in  iota,  the  street  uses  of  Park 
Avenue. 

In  other  words,  the  argument  is  that  the  more 
the  railroad  expends  in  keeping  its  railroad  out 
of  the  way,  the  more  highly  tliat  right  should  be 
valued  as  measured  by  the  assessed  value  of  abut- 
ting lots.  The  unfairness  of  this  argument  needs 


29 


only  to  be  stated  to  be  realized.  It  is  almost  imi- 
versally  the  accepted  doctrine,  certainly  by  the 
courts,  that  longitudinal  occupation  of  streets 
by  railroads,  or  other  public  utilities,  is  to  be 
measured  in  value  by  the  return  which  the  rail- 
road realizes  from  such  occupation.  If  upon  the 
hypothesis  of  the  learned  counsel  for  the  defend- 
ants the  railroad  company  was  required  to  vacate 
Park  Avenue  entirely,  assuming  that  this  could 
lawfully  be  done,  it  would  be  a vein'  serious  ques- 
tion whether  it  could  continue  to  have  its  terminal 
at  42nd  Street. 

AVe  submit  that  the  ruling  of  the  Referee  was 
entirely  right,  and  that  the  evidence  was  wholly 
without  bearing  upon  any  issue  in  the  case. 


THIRD  POINT. 

The  Referee,  and  the  Conrts  below  were 
clearly  right  in  holding  that  the  southerly 
half  of  the  Harlem  Bridge  was  erroneously 
included  in  the  assessment.  The  method 
adopted,  however,  of  correcting  the  error 
was  erroneous. 

The  southerly  half  of  the  Harlem  bridge  is  in- 
cluded in  the  assessment  for  the  railroad  in  Park 
Avenue  between  45th  and  a point  near  13.'lrd 
Street,  and  the  assessment  was  not  separately 
stated  (See  notice  of  the  Ta.\  Coitimissioners 
printed  at  page  fifi,  fol.  198  of  the  record).  It  is 
wholly  a matter  of  conjecture  as  to  how  large  this 
item  bulks  in  tbe  total  of  $1 2,29t>,I^l^h  which  also 
includes  lengthwise  in  Park  Avenue,  and  cross- 


30 


ings  East  45th  to  East  49tli  Street  east  of  Park 
Avenue,  and  East  45Lh  to  East  48tli  Street  west 
of  Park  Avenue.  It  is,  we  think,  to  he  assumed 
that  in  maldng  this  total  of  $12,299,400  the  Tax 
Board  had  set  various  amounts  opposite  these 
separately  stated  items,  and  that  some  substantial 
sum  was  set  opposite  the  item  for  one-half  of  the 
Harlem  bridge.  It  is  to  he  further  assumed  that 
this  substantial  amount  set  opposite  the  Harlem 
bridge,  whatever  it  was,  was  composed  of  two 
elements:  (1)  the  value  of  the  tangible  property, 
and  (2)  the  value  of  the  intangible  right.  The 
learned  Referee,  and  Special  Term,  have  sus- 
tained the  Relator’s  objection  to  the  inclusion  of 
this  item,  whatever  it  is,  in  the  total  assessment. 
The  validity  of  their  ruling  in  this  respect  has 
been  recently  confirmed  by  the  decision  of  the 
Court  of  Appeals  in  People  ex  rel.  Hudson  d 
Manhattan  Railway  Company  vs.  State  Board  of 
Tax  Commissioners,  203  N.  Y.,  119.  In  that  case 
the  question  was  presented  of  the  jurisdiction 
of  the  defendant  Tax  Commisisoners  to  assess 
as  a special  franchise  the  right  enjoyed  by  the 
Relator  of  operating  two  tunnels  under  the  North 
River,  which  right — lie  it  title  to  land  or  to  ease- 
ment in  land — was  granted  many  years  ago  by  the 
Land  Board  acting  as  the  agent  of  the  State  of 
New  York.  The  Court  held  that  while  a navigable 
stream  was  in  a sense  a highway,  it  was  not  the 
kind  of  highway  which  was  intended  in  the  tax 
law,  and  accordingly  directed  that  the  assess- 
ment levied  on  these  tunnels  he  strickeTi  from  the 
assessment  which  also  included  other  property 
under  streets  in  the  City  of  New  York,  which 
the  Court  considered  to  be  property  assessable 
as  special  franchises.  x\lthough  this  decision  of 
the  Court  of  Apy)eals  seems  to  set  the  general 


proposition  at  rest,  we  deem  it  proper  in  this 
connection  to  call  attention  to  the  fact  that  on 
the  trial  relator  introdnced  in  evidence  deeds 
showing  the  approach  to  the  Harlem  bridge  at 
both  ends  was  over  property  privately  owned  by 
the  relator,  or  its  lessor,  the  Xew  York  and  Har- 
lem Eailroad  Company;  viz.,  deed  from  Charles 
Henry  Hall  and  wife,  to  the  N.  Y.  & H.  R.  R.  Co., 
dated  June  19,  1847  (p.  103,  fob  309) ; deed  from 
Benjamin  L.  Benson  and  wife,  dated  June  19, 
1847  (p.  104,  fob  312) ; deed  from  Benjamin  L. 
Benson  and  wife,  dated  June  19,  1847  (p.  105,  fob 
314) ; deed  from  Charles  Henry  Hall  and  wife, 
dated  December  30,  1840  (p.  106,  fob  316) ; deed 
from  Isaac  Adriance  and  wife,  dated  May  25. 
1846  (p.  107,  fob  320) ; deed  from  the  New  York 
& Harlem  R.  R.  Co.  to  the  New  York  Central 
and  Hudson  River  R.  R.  Co.,  dated  April  1,  1873 
(p.  108,  fob  323) ; deed  from  Lewis  Morris  to 
the  N.  Y.  & H.  R.  R.  Co.,  dated  October  23,  1852 
(p.  110,  fob  328);  deed  from  Jordan  L.  Mott  to 
the  N.  Y.  & H.  R.  R.  Co.,  dated  Septeml)er  22, 
1852  (p.  110,  fob  330). 

The  descriptions  in  these  various  deeds  are  in- 
serted in  full  in  the  record.  A map  was  also  in- 
troduced, Exhilht  K”®  (Appendix,  p.  830),  which 
shows  the  location  of  the  property  conveyed  by 
these  various  deeds  plotted  on  the  map  with  ref- 
erence to  the  situation  of  the  railroad  and  the 
bridge  spanning  the  Harlem  River.  It  will  1)(‘ 
seen  that  parcels  of  private  property  acquired  bv 
the  railroad  company  intervene  between  the  rail- 
road in  Park  Avenue  and  the  southwesterly  bulk- 
head line  of  the  Harlem  River.  The  extent  to 
v/hich  private  profterty  owTied  by  the  railroad 
intery)oses  ])etween  the  alleged  special  franchise 
in  Park  Av'^enue  and  the  southwesterly  bulkhead 


line  of  the  Harlem  River  is  wholly  immaterial, 
hhie  Harlem  Bridge  is  not  used  in  physical  con- 
nection with  any  railroad  in  Park  Avenue,  but 
with  a railroad  on  each  side  of  the  Harlem  River 
constructed  upon  private  property. 

Further  than  that  the  Relator  proceeded  to 
]U’ove  that  neither  the  City  nor  the  State  of  New 
York  had  any  right,  title  or  interest  in  the  Harlem 
River  or  the  land  under  it,  across  which  this 
bridge  extends. 

See  Chapter  147,  Laws  of  1876,  entitled  “An 
Act  granting  to  the  United  States  the  right  to 
acquire  the  right  of  way  necessary  for  the  Im- 
provement of  the  Harlem  River  and  Spuyten 
Duyvil  Creek  from  the  North  River  to  the  East 
River  through  the  Harlem  Kills,  and  ceding  juris- 
diction over  the  same”;  passed  April  22,  1876. 
and  the  various  session  laws  amending  the  said 
act,  viz..  Chapter  345,  Laws  of  1879;  Chapter  65, 
Laws  of  1880 ; Chapter  61,  Laws  of  1881 ; Chapter 
377,  Laws  of  1882;  Chapter  214,  Laws  of  1883  (p. 
280,  fob  840). 

Also  resolutions  of  the  Commissioners  of  the 
Sinking  Fund,  one  dated  October  2,  1879,  and  the 
other  dated  September  7,  1881,  with  reference  to 
said  improvements,  and  the  cession  of  land  under 
the  Harlem  River  to  the  United  States  (p.  281, 
fols.  841-855). 

Relator  then  offered  in  evidence  a deed  exe- 
cuted by  the  Mayor,  Aldermen  and  Commonalty 
of  the  City  of  New  York,  dated  March  31,  1882, 
granting  to  the  United  States  of  America  certabi 
pieces  or  parcels  of  land  under  the  waters  of  the 
Harlem  River  therein  specifically  descrilied  for 
the  purpose  of  the  improvement  known  as  tbe 
Harlem  Ship  Canal,  this  grant  having  been  made 
under  authority  of  the  statutes  hereinbefore  re- 


ferred  to.  Tliis  deed  is  also  printed  in  the  Ap- 
pendix, p.  958,  fol.  2872. 

In  view,  not  only  of  the  decision  of  the  Court 
of  Appeals  referred  to,  but  of  these  documents 
received  in  evidence,  it  is  difficult  to  see  what 
there  is  left  in  the  way  of  a franchise  from  the 
State  or  City  of  New  York,  which  is  subject  to 
taxation.  We  do  not  contend,  of  course,  that  the 
bridge  itself  is  wholly  exempt  from  taxation.  It 
is  an  erection  on  private  property  owned  by  the 
Eelator,  or  the  New  Y"ork  and  Harlem  Railroad 
Company,  its  lessor,  and  extends  laterally  from 
lands  which  are  located  within  the  City  of  New 
York  and  are  properly  subject  to  the  local  taxing 
authorities.  As  a matter  of  fact  the  local  taxing 
authorities  have  always  assessed  this  property 
as  real  estate,  and  the  relator  has  paid  taxes 
thereon  during  all  the  years  that  the  franchise 
Tax  Law  has  been  in  existence,  including  the  year 
1908. 

This  brings  us  to  the  other  branch  of  the  propo 
sition,  viz.,  the  method  adopted  by  the  Referee 
and  the  Court  below  to  cure  this  error.  It  was 
testified  to  by  Mr.  Hoyt  (p.  127,  fol.  381)  and 
found  by  the  Referee  and  the  Court  that  the  value 
of  the  tangible  property  comprising  the  southerly 
half  of  this  bridge,  was  the  sum  of  $312,401.  What 
appraisal  of  the  intangible  right,  which,  adfled  to 
this  value  of  the  tangible,  would  equal  the  smii 
which  the  Tax  Commissioners  included  without 
stating  the  amount  thereof  in  their  total  assess- 
ment, it  was  impossible,  of  course,  to  determine. 
As  we  have  already  shown,  the  original  return 
of  the  defendant  Tax  Commissioners  contains  no 
infonnation  on  tho  subject;  the  Relator’s 
subj'Kcnas  on  their  motion  were  (plashed,  so  that 
they  could  not  be  compelled  to  apjiear  ladore  the 


34 


Referee  and  testify  to  this  information,  and  finally 
their  amended  return  contains  no  information 
whatever  on  the  subject.  The  case  seems  to  be 
absolutely  on  all  fours  with  the  Harlem  River 
and  Port  Chester  Railroad  Company’s  case  de- 
cided by  Senator  Elsberg,  Referee  (N.  Y,  Law 
Journal,  April  24,  1909),  where  without  separa- 
tion the  Commissioners  had  taxed  two  highway 
crossings,  one  of  which  was  a special  franchise, 
and  the  other  of  which  was  not.  The  Referee  held, 
and  he  was  confirmed  by  the  Court,  Mr.  Justice 
Betts  sitting,  that  the  whole  assessment  was  void 
and  must  be  stricken  from  the  rolls,  and  from  this 
determination  no  appeal  was  taken.  See  also 

Potter  vs.  The  Mayor,  151  N.  Y.,  16,  19 ; 

People  ey  rel.  Garden  City  Co.  vs.  Valen- 
tine, 5 App.  Div.,  520; 

cases  cited  and  relied  upon  by  Senator  Elsberg. 

In  the  case  at  bar  the  Referee  assumed  to  cure 
this  conceded  illegality  by  merely  deducting  from 
the  total  assessment  the  value  of  the  physical 
property  in  the  southerly  half  of  the  bridge,  as 
testified  to  by  Mr.  Hojd  and  as  found  by  himself, 
viz.,  $312,461.  That,  of  course,  still  left  in  the 
assessment  the  value  of  the  intangible  element, 
which,  of  course,  is  non-existent,  and  upon  which 
the  Relator  is  nevertheless  required  to  pay  taxes. 
We  submit  that  this  was  manifest  error  on  the 
part  of  the  learned  Referee,  and  the  Trial  Court. 
The  true  and  only  remedy  under  the  circum- 
stances is  to  declare  the  entire  assessment  void, 
and  direct  its  cancellation  on  the  rolls. 

If  it  should  be  suggested  that  the  Relator  should 
make  consecutive  and  persistent  motions  for  an 
amended  return  on  the  part  of  the  Tax  Commis- 
sioners, so  that  they  would  finally  disclose  the  in- 


formation  that  ought  really  to  have  been  includeil 
in  the  original  notice  of  assessment,  we  are  met 
by  a decision  of  the  Supreme  Court,  Special  Term, 
Mr.  Justice  Rudd  sitting  in  People  ex  rel,  M.  1'., 
0.  (P  ir.  It.  Co.  vs.  Woodbury,  reported  71  Misc., 
474,  atf’d  without  opinion  147  App.  Div.  929  and 
by  this  Court,  without  opinion,  to  the  effect  that 
because  the  Tax  Commissioners  rendered  a re- 
turn which  contained  no  actual  information  and 
which  the  Court  could  not  understand  was  no 
reason  why  the  Relator  should  compel  them  to 
file  one  that  does  convey  such  information  and 
is  intelligible.  If  our  conception  of  the  effect 
of  this  decision  is  correct,  the  defendant  Tax  Com- 
missioners have  fortified  themselves  at  every 
point  so  as  to  deprive  the  court  and  the  com- 
plaining party  of  any  information  whatever  in 
reference  to  these  assessments,  and  the  method 
of  making  them.  If,  as  the  result  of  this  extra- 
ordinary situation,  the  courts  are  prevented  from 
getting  the  necessary  information  to  enable  them 
to  make  a correction,  the  defendants  surely  can- 
not complain  if  the  entire  assessment  is  stricken 
out  as  void,  which  we  submit  should  he  done 
here.  This  is  simply  an  additional  reason  for 
the  insistence  made  in  our  First  Point  that  if 
any  portion  of  the  railroad  in  Park  Avenue  is 
held  to  be  not  a special  franchise,  the  whole  assess- 
ment, because  inse])arahle,  must  fall, 


3G 


FOURTH  POINT. 

The  State  Board  of  Tax  Commissioners 
was  without  jurisdiction  to  include  as  spe- 
cial franchises  the  title  to  the  sub-surface 
of  certain  Streets  near  the  Grand  Central 
Terminal  which  Relator  obtained  from  the 
City  of  New  York  pursuant  to  special  legis- 
lation on  the  subject. 

Kelator  offered  in  evidence  Chapter  425  of  the 
Laws  of  1903,  and  the  grant  and  agreement  dated 
June  19,  1903,  between  the  City  of  New  York  and 
the  New  York  and  Harlem  Railroad  Company, 
Lessee  of  The  New  York  Central  and  Hudson 
River  Railroad  Company;  also  grant  and  agree- 
ment dated  December  4,  1903,  between  the  same 
parties,  and  the  grant  and  agreement  dated  April 
28th,  1905,  between  the  same  parties  under  said 
Chapter  425  of  the  Laws  of  1903  as  amended  by 
Chapter  639  of  the  Laws  of  1904,  and  also  said 
Chapter  639  of  the  Laws  of  1904;  the  relator  also 
offered  in  evidence  agreement  dated  July  8,  1907, 
between  the  same  parties  as  authorized  by  the 
session  law  cited,  l)eing  a modification  of  detailed 
])lans  (p.  831,  fob  2491  to  p.  919,  fob  2755). 

Relator  also  offered  in  evidence,  while  Mr.  IV. 
H.  Hoyt  was  on  the  witness  stand,  a map  of  the 
Grand  Central  Terminal,  exhibiting  the  premises 
granted  by  the  City  under  the  agreements  and 
grants  in  evidence  and  already  offered,  and  the 
extent  to  which  the  terminal  work  had  progressed, 
and  there  had  been  erections  made  by  the  railroad 
compan}"  within  the  street  lines,  and  below  the 
surface  thereof,  as  of  the  second  Monday  of  Jan- 
uary, 1908  (p.  121,  fob  359,  reproduced  in  the 


Appendix,  p.  932).  Exhibit  S-190S,  shows  tlie 
general  layout  as  it  existed  prior  to  the  improve- 
ments carried  out  under  the  act  of  1903,  and  sub- 
sequent acts  (Appendix,  p.  931).  Exhibit  T-190S 
shows  a plan  of  the  street  level  of  the  new  Grand 
Central  Terminal,  the  various  grants  made  by 
the  City  of  lands  under  the  surface  of  Park  Ave- 
nue and  the  cross  streets  being  indicated  by  col- 
oring,  and  the  extent  to  which  lands  under  these 
Cl  OSS  streets  had  been  excavated  and  permanent 
erections  made  were  also  indicated  as  shown  in 
the  legend  on  the  map,  together  with  the  annual 
payments  reserved  to  the  City  for  the  grants  of 
lands  under  the  surface  of  the  streets. 

Mr.  Hoyt’s  map  shows  that  no  part  of  the  ex- 
cavation had  extended  westerly  of  the  west  line 
of  Park  Avenue,  including  \’'anderl)ilt  Avenue, 
and  that  no  erection  of  new  structures  had  ])cen 
made  under  the  surface  of  Depew  Place.  The 
black  lines  on  the  map  indicate  the  extent  to 
which  erections  had  been  made  in  the  cross  streets 
from  45th  Street  to  50th  Street,  and  under  the 
easterly  portion  of  Park  Avenue  from  50th  Street 
to  57th  Street. 

As  the  relator  obtained  no  use  from  these  part- 
ly erected  structures,  it  is  manifest  that  the  in- 
tangible element  in  these  sub-surface  rights  was 
of  merely  nominal  value. 

The  grant  from  the  City,  datofl  June  19,  1903, 
may  be  taken  as  an  index  of  the  language  con- 
tained in  all  the  grants.  The  granting  clause  is: 

“The  party  of  the  first  part  (the  City  of 
New  York)  for  and  in  consideration  of  the 
sum  of  Twenty-five  thousand  ($25,000)  dol- 
lars per  annum,  to  be  paid  to  the  party  of  the 
first  part,  as  hereinafter  f)rovidefl,  and  in 
order  to  enable  the  said  parties  of  the  second 
part  to  depress  their  tracks  in  the  manner 


38 


provided  in  said  act,  and  in  order  to  permit 
the  operation  of  trains  otherwise  than  by 
steam  locomotives,  as  required  by  said  act, 
does  hereby  grant  to  the  said  parties  of  the 
second  part  the  right  to  occupy  and  use  for 
the  purposes  of  their  incorporation,  and  dur- 
ing the  term  or  terms  of  their  corporate  exist- 
ence. 

The  sub-surface  of  Park  Avenue  from 
Forty-fifth  Street  to  the  southerly  line  of 
Fifty-sixth  Street;  the  sub-surface  of  Park 

Avenue,  bounded  and  described  as  follows  ’ ’ : 

* * * 

“Nothing  in  this  grant  contained  shall  be 
held  to  create  a fee  in  the  said  parties  of  the 
second  part,  or  either  of  them,  in  or  to  the 
soil  of  said  portions  of  said  streets  or  of  Park 
Avenue,  or  any  part  thereof ; nor  to  prevent 
The  City  of  New  York  from  occupying  or 
using,  or  from  permitting  others  to  occupy 
or  use  any  part  of  the  said  soil  of  said  por- 
tions of  said  streets  or  avenue  underneath 
the  tracks  and  structures  of  said  parties  of 
the  second  part,  as  shown  on  the  plans  and 
profiles  provided  for  in  section  three  of  said 
Act,  in  any  manner  which  shall  not  interfere 
with  or  endanger  the  occupation  or  use  by 
said  parties  of  the  second  part;  which  plans 
and  profiles  were  submitted  by  The  New 
York  Central  and  Hudson  River  Railroad 
Company,  in  duplicate,  to  the  said  Board  of 
Estimate  and  Apportionment  for  its  approval 
on  the  29th  day  of  May,  1903,  and  were  ap- 
proved by  said  Board  of  Estimate  and  Ap- 
portionment on  the  day  of  the  date  hereof.” 

It  will  be  observed  that  the  agreement  in  ques- 
tion amounts  to  a grant  in  perpetuo  for  an  annual 
payment  of  the  right  to  use  the  lands  under  the 
streets  mentioned  in  any  way,  and  for  any  pur- 


pose  which  the  grantees  see  fit,  provided  it  be  for 
the  purpose  of  their  incorporation..  The  upper 
limitation  is  the  surface  of  the  streets  as  deter- 
mined by  the  plans  approved  by  the  Board  of 
Estimate  and  Apportionment,  and  the  lower  limit 
is  as  shown  on  such  plans.  The  City  retains  the 
right  to  the  soil  below  the  structures  indicated  in 
said  plans,  and  can  authorize  any  other  railroad, 
or  other  structures,  or  use,  to  occupy  the  same 
provided  it  does  not  interfere  with  the  rights 
granted. 

This  is  not  a permission  to  lay  tracks,  or  pipes, 
or  conduits,  upon,  over  or  under  the  surface  of 
public  streets,  the  situation  which  gave  rise  to 
the  enactment  of  the  Ford  Franchise  Tax  Law, 
and  the  situation  as  contemplated  in  the  act  itself. 
Doubtless  the  property  of  the  relator  thus  con- 
veyed, together  with  whatever  jjhysical  erections 
are  made  within  the  space  conveyed,  are  taxable 
as  real  estate,  l)ut  l>y  the  local  taxing  authorities. 
It  would  be  just  as  appropriate  to  tax  as  a special 
franchise  lands  under  watet-  owned  by  the  City 
and  granted  by  the  City  to  a private  person  for 
dock  or  manufacturing  j)urposes.  The  City  has 
exacted  very  substantial  compensation  for  the 
grants  made  to  the  railroad  company  for  space 
which  may  he  valuable  to  the  railroad  company, 
but  which  is  actually  worthless  to  the  City. 

Fanyiinf!  vs.  Oshoryu'  (102  N.  Y.,  441),  cited  by 
the  Referee  (p.  719,  fob  21  oG)  holds  that  a private* 
party  for  private  pnrf)Oses  cannot  ofeerate  a rail 
road  on  the  surface  of  a public  street.  1’his  is 
far  from  hobling  that  the  perijctual  lease  of  por- 
tions of  the  space  under  the  surface  of  public 
streets  for  terminal  railroad  })ur])f)scs  is  the  grant 
of  a special  franchise  witliin  the  meaning  of  the 
tax  law. 


40 


Mr.  Hoyt  testified  to  the  various  erections  which 
had  been  made  under  the  surface  of  these  cross 
streets  and  under  Park  Avenue.  The  total  value 
of  all  of  the  structures  in  question  as  of  the  sec- 
ond Monday  of  January,  1908,  was  the  sum  of 
$234,676  (p.  126,  fol.  377).  As  already  stated,  the 
Board  of  Tax  Commissioners  did  not  make  any 
separate  valuation  of  these  various  alleged  fran- 
chises. They  are  all  lumped  together  in  one  in- 
separable amount.  The  situation  is  without  pre- 
cedent, and  we  can  only  argue  on  the  general 
principle  that  the  franchise  Tax  Law  does  not 
include  or  contemplate  such  a situation  as  is  d''- 
closed  with  reference  to  the  lower  end  of  Park 
Avenue  and  these  various  cross  streets. 


FIFTH  POINT. 

The  Referee,  and  the  Courts  below,  cor- 
rectly ruled  that  Relator  is  entitled  to 
have  the  assessment  equalized  with  the 
assessments  of  other  real  estate  not  special 
franchises  in  New  York  County. 

The  tax  law  in  force  at  the  time  this  assessment 
was  made  required  the  State  Board  to  assess  at 
full  value,  and  the  presumption  is  that  they 
obeyed  the  law. 

The  right  of  such  equalization,  after  much  dis- 
cussion and  some  contrariety  of  judicial  opinion, 
has  been  finally  settled  by  the  Court  of  Appeals 
in  People  ex  rel.  Jamaica  Water  Supply  Compau}! 
vs.  State  Board  of  Tax  Commissioners  (196  N.  Y., 
39).  See  discussion  l)y  Willard  Bartlett,  J., 
pages  60-62.  This  rule  has  been  followed  in  nu- 


41 


merous  other  cases  which  have  come  before  the 
courts.  This  course  of  adjustiug  assessments  has 
become  so  universal  that  m 1911  the  Legislature 
amended  the  Tax  Law,  Chapter  8U4,  of  the  Laws 
of  1911,  by  giving  the  State  Board  of  Tax  Com- 
missioners authority,  after  fixing  an  assessment 
at  full  value,  to  equalize  it  so  that  the  same  will 
be  upon  a par  with  assessments  of  other  real  es- 
tate not  special  franchises  in  the  same  taxing  dis- 
trict. 

In  the  case  at  bar  the  found  fact  (p.  557,  fob 
1670)  is  that  the  percentage  of  realty  assessment 
in  the  County  of  New  York  to  full  value,  other 
than  special  franchise  corporations,  for  the  year 
1908,  was  89. 

The  City  of  New  York,  intervening-defendant, 
has  appealed  from  that  part  of  the  final  order 
which  eciualizes  the  assessment  in  question,  its 
contention  being,  as  we  understand  it,  that  on  its 
presentation  of  the  net  earnings  of  this  alleged 
special  franchise  the  intangible  element  and  tin- 
assessed  value  of  the  tangible  property  together 
greatly  exceed  the  assessment  of  $1 2,299, 400.n!) 
made  by  the  State  Board  of  Tax  Commissioners 
as  the  full  value  of  the  franchise  (p.  66,  fol.  198). 
As  we  have  shown,  this  claim  rests  upon  assuni})- 
tion  of  facts  and  hypotheses  utterly  witliout  war- 
rant in  the  evidence,  and  in  fact,  contrary  to  com- 
mon sense  and  common  observation. 

Tlie  R(‘feree,  and  the  'Frial  Court,  sjK-eificallv 
refused  to  find  the  findings  of  fact  covering  tlii-^ 
presentation  j)roposed  by  tin-  intervening-defend- 
ant (pp.  705-710,  fols.  2115-21.30).  Tln-re  are  no 
findings  in  the  case  that  the  assessed  value  of  tin- 
relator’s  projjcrty  was  h-ss  tban  its  true  value, 
even  wlien  reduced  so  as  to  (-(inalize  it  witli  tl-e 
prevailing  rate  of  assessment.  4’lie  (Vnirt  below, 
without  holding  that  the  assessment  under  r* 


view  was  either  below  or  above  the  true  value  of 
the  alleged  special  franchise,  in  effect  sustained 
it  because  in  its  opinion  no  facts  had  been  ad- 
duced on  the  hearing  on  which  a re-assessment 
could  be  predicated. 

This  situation  makes  the  application  of  the  re- 
cent ruling  of  the  Court  of  Appeals  in  People  ex 
rel.  The  Hudson  S Manhattan  Railway  Company 
vs.  State  Board  of  Tax  Commissioners,  203  N.  Y. 
119,  exactly  applicable  to  the  case  at  bar.  Chief 
Judge  Cullen  says  in  discussing  an  appeal  by  the 
City  exactly  similar  (p.  132) : 

“In  the  absence  of  such  a finding  it  must 
be  assumed  that  the  State  Board  assessed 
the  relator’s  property  at  its  full  value — a 
presumption  which  the  evidence  in  this  case 
fully  supports,  and  the  relator  was  entitled 
to  the  reduction.” 

It  would  seem  that  further  discussion  of  this 
point  is  superfluous. 

The  order  appealed  from  should  he  re- 
versed, and  the  assessment  cancelled,  or  in 
the  event  that  the  cotirt  finds  that  any 
part  of  the  assessment  is  legal  and  separa- 
ble from  the  illegal  portion,  the  order  ap- 
pealed from  should  be  reversed  and  the 
case  remitted  to  the  special  term  for  fur- 
ther proceedings. 

Respectfully  sulanitted, 

Alex.  S.  Lyman, 
Attorney  and  of  Counsel 
for  the  Relator. 


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